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At the turn of the millennium, ACS and Perot were two darlings of the Texas-centric outsourcing community. But they have slowly fallen away from the “top-tier” of service providers from a buyers perspective.
ACS seemed to be taking a scattershot approach to their global delivery centers, and focusing on transactional services with limited value-add potential. For Perot, solid finances and US healthcare relationships weren’t translating into meaningful success in other verticals and geographies.
So now they have been acquired by two product-based technology firms. While the business overlap is less than for HP and EDS (so the fall-out will be smaller), the incremental value for current or future customers is not readily apparent.
For Perot, leveraging Dell’s global marketing savvy could improve their image and get them into new markets. But CIOs are shifting away from hardware-centric models, so Dell-biased views may hurt existing relationships. Xerox was recently given a #1 ranking in Document Process Outsourcing (note 1). But adding that transactional depth to ACS doesn't create a differentiated or compelling value proposition.
On top of this, integrating product and service cultures is very difficult (recall IBM-PwC), so the management distraction risks are significant. While both firms clearly needed something to re-invigorate their business, limited synergies in these combinations will not likely solve their short-term challenges.
ACS seemed to be taking a scattershot approach to their global delivery centers, and focusing on transactional services with limited value-add potential. For Perot, solid finances and US healthcare relationships weren’t translating into meaningful success in other verticals and geographies.
So now they have been acquired by two product-based technology firms. While the business overlap is less than for HP and EDS (so the fall-out will be smaller), the incremental value for current or future customers is not readily apparent.
For Perot, leveraging Dell’s global marketing savvy could improve their image and get them into new markets. But CIOs are shifting away from hardware-centric models, so Dell-biased views may hurt existing relationships. Xerox was recently given a #1 ranking in Document Process Outsourcing (note 1). But adding that transactional depth to ACS doesn't create a differentiated or compelling value proposition.
On top of this, integrating product and service cultures is very difficult (recall IBM-PwC), so the management distraction risks are significant. While both firms clearly needed something to re-invigorate their business, limited synergies in these combinations will not likely solve their short-term challenges.
1 2009 Black Book of Outsourcing, Brown-Wilson Group
Xerox/ACS and Dell/Perot: Synergy-Challenged
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