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. 'EDS has learned how to manage themselves globally,' he said. 'Xerox is more of a multinational.' Mr Dal defines a multinational as a company that thinks in terms of many national markets put together as opposed to a company which creates a global product which can be used in all of their markets with the least modification. An example of EDS's global view, is a series of 'affinity groups' throughout the world which, Mr Dal said, are groupings of individuals worldwide with common skills in a technology and provide a common discussion point for people within the organisation looking for answers to particular problems. While potentially a difficult process, the transition to EDS management has been smooth. In 20 countries, with operations ranging in size from 1,000 employees down to a handful, EDS will take over Xerox's information technology management. Since signing the contract on June 14, 2000 employees have been moved from Xerox to EDS and in 17 of the 20 countries EDS is already in place. Even with all this upheaval, Xerox expects to soon be announcing another good financial quarter. 'The company did not fail,' Mr Dal said. After the transfer of 2,000 people, Mr Dal said no one knew the difference. 'They were the same people,' he said. 'To some, outsourcing implies there is a finality, but it doesn't mean that on July 2nd [the date of the transfer] people were suddenly gone; they just happened to wear an EDS badge.' Still, not all former Xerox employees will continue to work with Xerox. 'That's part of the success of this change and this partnership,' Mr Dal said. 'We don't want just the same people.' Locally, Rank Xerox Hong Kong is not one of the 20 offices which fall under the deal with EDS. Still, by early next year the Hong Kong office should have an information technology plan in place which conforms to the broad guidelines of Xerox's IM2000 strategy. 'I would venture that by the end of first quarter 95 in almost every country where this can make business sense we will have put in a new information technology strategy,' Mr Dal said.