Xerox Chairman and CEO Ursula Burns recently announced the company’s plans to split into two market-leading companies by the end of 2016. For the company’s business process outsourcing (BPO) business, significant influence and three board seats will go to activist investor Carl Icahn.
While many at Xerox are scrambling to accommodate the split, it’s business as usual (BAU) for the Human Resource (HR) and benefits solutions business. This group has weathered a great deal of change over the years; many of its clients can trace its journey from Kwasha Lipton to PwC/Unifi to Mellon to ExcellerateHRO to ACS to Xerox. In recent years, Xerox’s HR/benefits business has also seen a number of leadership and organizational changes, including bringing it together with Xerox’s global HR benefits and human resource consulting firm Buck Consultants under HR solutions business leader Fraser Smart and the recent notice of Smart’s departure, whose replacement has yet to be identified.
Nonetheless, the benefits business seems fairly well insulated from the latest announcement. Both the consulting and administrative services offerings will remain intact under the new BPO business, and there are no anticipated changes to platforms, service centers or client-facing applications. According to Xerox benefits leadership, the business will continue to focus on three goals:
- Retaining happy, profitable clients
- Growing their Right Opt private exchange offering
- Integrating more deeply across consulting and administration.
Committing to BAU has served the business well over the past few years. It has gone from a business that oversold and underpriced its ability to deliver to one that has seen year-over-year improvement in revenue, profitability and—most importantly—client satisfaction.
Xerox is currently one of only three major benefits administrators (Aon Hewitt and Fidelity being the other two) who can truly offer Total Benefits Outsourcing, including health and welfare, defined benefit and defined contribution offerings. According to ISG research, out of all the companies with greater than 10,000 participants, Xerox services 12 percent of the health and welfare market, 22 percent of the defined benefit market and six percent of the defined contribution market. Though not the leader in any of these markets, Xerox maintains a solid-and-growing market share.
Xerox’s new BPO company expects to have approximately 100,000 employees and $7 billion in revenue, making it the second largest BPO company by revenue. Its HR/benefits solution business accounts for approximately 20 percent of those revenues. Xerox’s other services include healthcare payments, transportation, finance and accounting and customer care services.
Only time will tell whether the planned split will pay off with a greater focus on BPO. Our bet is that the new Xerox services business will be a stronger competitor.
ISG helps companies make informed decisions in the ever-changing benefits administration market. Contact Don Biron or Deb Card to discuss how we can help you.
About the authorDrawing on 25 years’ experience Don works with clients to clearly define appropriate benefits and healthcare exchange sourcing service delivery strategy, implement their sourcing decisions and develop effective relationships with internal or external service providers. His expertise includes assessment, business case development, service provider selection, and services implementation.
