Sun sees €5m savings from Xerox outsourcing deal

Xerox has announced a five-year deal to outsource Sun's document production, which is expected to result in a €5m saving for Sun.

The Xerox Global Services division will take over the management, maintenance and support of Sun's printers, copiers and fax machines for 119 sites across Europe. This includes supervising contracts for non-Xerox devices - which make up 35 per cent of Sun's resources - consumables such as printer ink and helpdesk services for Sun employees.

Xerox will be paid on a per-printout basis.

As part of the deal, Xerox conducted an assessment of Sun's current document production situation in Europe.

Larry Matarazzi, director of workplace resources for Europe, the Middle East and Africa at Sun, said: "It was a bit shocking when we found out what was going on." It turned out Sun had 100 different vendor contracts, over 1,000 invoices per month and eight per cent of devices were not working.

It's not unusual for companies to be in the dark about their printers and copiers, in part because the responsibility for these devices generally falls across business units – IT, facilities and finance.

Ninety per cent of organisations cannot give an estimate of how much they spend on document production and maintenance, according to a 2003 study from analyst house IDC.

After a year-and-a-half pilot project, Sun said it sees a 10 per cent reduction in document production costs as soon as it rolls out the Xerox services to an office. Xerox has guaranteed a further 25 per cent decrease and €5m in savings over the five-year life of the contract.

The two companies will share responsibility for meeting these metrics. Shaun Pantling, director and general manager of Xerox Global Services Europe, said: "If we don't meet these goals, we write a cheque [to Sun]."

Savings will come in part from significant streamlining. Sun's 1,744 devices will be rationalised by more than half and the ratio of devices to employees will drop from 1:7 to 1:17.

Along with cost reductions, Sun's Matarazzi said the deal provides more responsive helpdesk service for employees having device problems then previously offered and gives the company plentiful document production statistics which it can use to better manage the process going forward.

The market for on-site facilities management outsourcing is estimated to be worth about €3bn in 2004 and will grow by about six per cent annually over the next five years, according to InfoTrends/CAP Ventures.

IDC sees the entire BPO and IT outsourcing market growing at about nine per cent each year over the next three years. Though IDC has not yet sized the document outsourcing market, IDC research director Jamie Swindon said it comprises a "relatively small part" of the overall outsourcing market though there is "high growth" in pure document outsourcing deals.