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ACS Wants 50% Of Workforce Offshore, Eyes Acquisitions

The outsourcer seeks larger overseas presence and M&A-fueled growth.
Outsourcer Affiliated Computer Services is aggressively building out its offshore operations in an effort to tap low-cost talent and keep pace with overseas rivals. Ultimately, the Dallas company wants about one-half of its workforce in foreign locations, a senior company executive said in an interview Wednesday.

"We're letting our customers drive this," said ACS executive VP Ann Vezina, who is also president of the company's Commercial Solutions Group.

Vezina also said ACS is in talks to acquire IT and business shared-services units from companies that are looking to farm out activities unrelated to their core lines of business. "People are looking to pare down noncore assets in this economy," said Vezina. She added that talks include negotiations with a major European media and entertainment company.

Vezina said offshore resources allow ACS to offer customers lower prices for IT work and business services. They also help the company remain cost-competitive with burgeoning Indian rivals such as Wipro, TCS, and Infosys. Currently, ACS maintains an onshore-offshore employee mix of about 70% to 30%, respectively.

"We want that mix around 50-50," said Vezina.

Vezina did not specify a timeframe within which ACS hopes to achieve its goal of having 50% of its 74,000 employees offshore. The pace, she said, would largely be determined through consultation with the company's customers.

ACS's blue-chip clients include United Technologies, Ingersoll Rand, and Nike. It also has numerous public-sector customers.

Vezina said she wasn't yet sure if tax code changes proposed this week by President Obama, including a provision that would make it more difficult for U.S.-based companies to defer payments on foreign income, would slow the company's offshoring efforts. "We're watching it closely," said Vezina.

India, where ACS currently maintains about 5,000 workers, is a main focus of the company's offshore recruiting efforts, but the company is also eyeing locations in other parts of Asia, as well as Europe and South America. On Tuesday, ACS announced it is adding 150 workers to its facility in Santo Domingo in the Dominican Republic.

ACS isn't the only Western outsourcer that's drawing heavily from offshore locations. IBM maintains more than 70,000 employees in India, while Accenture now has more workers on the subcontinent than in the United States.

ACS said revenue increased 4.4% in the most recent quarter to $1.61 billion, while earnings per share grew 11.6% to 96 cents.

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