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Xerox’s CEO Wants to Shake Up the Services Market

Ursula Burns says Xerox can outfox low-cost outsourcing companies with better technology.
February 20, 2013

Xerox dominated the office of yesterday with its copiers, laser printers, and fax machines. Now Ursula Burns is trying to strengthen its role in the offices of tomorrow. Since becoming CEO in 2009, she has increased Xerox’s sales of IT-related services, like processing health insurance claims and managing customer-service call centers. Nevertheless, Burns—a mechanical engineer who has worked at Xerox since an internship in 1980—told MIT Technology Review’s deputy editor, Brian Bergstein, that the company isn’t straying from its technological roots.

The field of business services does not necessarily reward technological innovators. Isn’t it largely driven by how well you lower a client’s costs?

It is. The start of BPO [business-process outsourcing] was basically taking the mess of somebody else and doing it for less. Let’s take business processes that are identical—everybody has to answer calls—and if you can [handle such things for many companies], then you can use scale to your advantage. Then it went to “Can we move it to lower-cost areas and lower-cost people?” So it became labor arbitrage. And where we are now with BPO, and this is the most exciting part about Xerox, is that the next big step is not in trying to go to the next cheapest place.

Why? Have we reached the lowest that labor costs can go?

Not yet, but we’re getting there. The next big step comes in technology. So if you have 100 people answering the phone and they take 10 calls an hour, can you get it such that you have 100 people that take 15 calls an hour? Can you apply technology to make it such that instead 
of taking six or seven weeks to train a person in a complex call, you make it take two weeks, or one week? Can you make it such that—most calls are recorded—you can look at the calls after and figure out key things, see patterns via big data? And can you actually apply that?

What’s an example of a services deal you won because of technology you had?

Working with municipalities in California on better parking. Parking is a pain in the ass. And it doesn’t get enough money for the value. In the middle of the day [cities] want to charge a whole lot of money for parking on the street. We developed congestion-parking solutions such that [cities] can vary price. So you’re driving around, and—some of this is still in trial mode—you can get a bing on your phone that says “There’s a parking spot a block over,” and it will charge you the appropriate amount. This is all driven by technology from our Grenoble labs [in France].

In the 1970s, PARC, Xerox’s Silicon Valley lab, invented computing breakthroughs that languished because they didn’t fit into Xerox’s copier business. How do you keep your researchers focused now?

It’s all about themes. Even if [Xerox’s customers] are in many different lines of work, one of the themes is that they [all] have a lot of information, and a lot of it has to be processed, and generally by people. A large amount of what we do is to try to figure out a way we can make a process operate via technology like a human would operate it, without the inefficiencies and the errors and moods.

Why have you cut Xerox’s spending on research, development, and engineering?

Primarily because of what we are RD&Eing. When you are a builder of things, one of the most expensive pieces of RD&E is the building of the thing—the prototyping. If you look at a software company’s RD&E, it’s [often] counted in cost of goods or packaged in the price of a deal. You develop a solution on behalf of a client and it’s not called “research.” It’s not a capital expense.

My big balance right now is to make sure we don’t spoil ourselves into believing all of the innovation will come at ­the client site. I want to think even beyond that. That’s where the labs have to jump to.

How much longer will Xerox still be selling copiers and printers?

For as long as the customer needs them, which will still be a while.

Well, will offices still be churning out lots of paper in 2020? 2030?

In 2020, oh yeah, there will still be a lot of paper. People like it. You fold it up, you put it in your shirt. Until somebody develops a technology that [has such] benefits in some other form, paper will be here. I was just looking at cars. They still hand me brochures! It’s really important. And by the way, when I do it on my iPad, it’s not as easy. So until they figure out a way to make it that easy, paper will be there and I’ll still be printing.

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