Xerox CEO Ursula Burns called the deal a "game changer" that will help the company dramatically expand by combining its strengths in document technology with the expertise of ACS in work-process management and automation. "Through our strategic initiatives, it became clear that the BPO market is well aligned with our business and a key driver of long-term growth," Burns told investors.

With its acquisition of ACS, Xerox will become a $22 billion global company, of which $17 billion is in recurring revenue -- a significant boost to the annuity stream, Burns said. "The revenue we generate from services will triple from $3.5 billion in 2008 to an estimated $10 billion next year," Burns said.

A $150 Billion Market

ACS automates paper-based work processes and provides specialized BPO and information-technology services to a wide range of industries, including telecommunications, retail and financial services, health care, education and transportation. The acquisition will enable Xerox to target the $150 billion BPO market, which the company said is growing at five percent a year.

"Customers are increasingly seeking service providers that offer a full range of solutions -- from their document technology to the process management in their back and front office operations -- and large enterprises require global capabilities and global account management," Burns told investors. "That is exactly what we will deliver by expanding Xerox's portfolio of document technology and services to include the BPO capabilities of ACS."

Burns said ACS is the largest provider of managed services to federal, state, county and local governments in the United States. But with 92 percent of the company's revenue coming from U.S. sources, ACS is comparatively weak overseas, which is where Xerox can help.

"Our strength around the world from a global perspective ... allows ACS and Xerox to step up immediately" and serve customers, Burns said. "Combined, we will bring global scale and the benefit of Xerox's brand presence and sales relationships to help ACS expand in Europe, Asia and South America."

Expanding the Company's Reach

Xerox thinks the best way for ACS to expand its reach is with account leadership.

"We have salespeople around the world who are what we call global account managers," Burns said. "Those connections will be used to actually bring ACS's expertise into the client base and to have ACS do most of the selling of their line of business and their expertise."

Xerox said it's confident it will be able to achieve significant incremental revenue growth by leveraging Xerox's global brand and established client relationships to scale ACS's business in Europe, Asia and South America. The document technology giant will also integrate its intellectual property with ACS's services to create new solutions for end-to-end support of customers' work processes and tap its researchers around the world to build solutions that can expand ACS services even further.

This is all about doing something more with the client's data than just scanning and storing it, Burns explained. "If you capture an image and then can actually manipulate it and add value to that image," Burns said, "you can actually move up the value chain with the ACS customer ."