XEROX's recent agreement with EDS to outsource its information technology management functions in 20 countries where it has offices represents the first time a major company not in financial difficulty has made such a major shift in perspective towards outsourcing, according to company officials.
In fact, said Jagdish Dal, Xerox's vice-president of information management, the trend towards focusing on one's 'core competencies' and bringing in outside expertise for one's other areas of work is a movement likely to gain momentum among many companies, especially those who are trying to be global, as opposed to simply multinational.
'Corporations have to understand what their core competencies are and invest in those core competencies,' he said. 'If [an area] is not your core competency then you should invite another firm who's core competency it is and let them manage it for you.' Towards this end, Xerox has set up its IM2000 strategy to help it define its core competencies. According to Mr Dal, after being 'brutally frank' with itself, the company signed, in June, a US$3.2 billion outsourcing deal over the next 10 years with EDS for management of its information technology systems.
'We decided we were going to be brutally frank when we are not troubled instead of being forced to do it later,' Mr Dal said. While document management is Xerox's core competency, Mr Dal said that information technology management was not.
Part of the focus of this major re-orientation at Xerox is to become more of a global company.
'Our applications today are not global, they are very functional,' Mr Dal said. In fact, in looking at itself, Mr Dal said Xerox looked at those aspects of its corporate culture it did not want and those it wanted to change to see if their outsourcing partner could help them to change.
A global orientation was one of those factors.