Xerox 2014 Annual Report Download - page 20

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•Xerox Research Center Europe (XRCE):Located in Grenoble, France, XRCE research aims to differentiate
Xerox business process service offerings by simplifying them and making them more automated, intelligent and
agile. The center combines its world-class expertise in imaging, text and data analytics, with insights from its
ethnographic studies to create and design innovative and disruptive technology.
•Xerox Research Center India (XRCI):Located in Bangalore, India, XRCI explores, develops, and incubates
innovative solutions and services for our global customers, with a special focus on emerging markets.
Investment in R&D is critical for competitiveness in our fast-paced markets. We have aligned our R&D investment
portfolio with our growth initiatives, including enhancing customer value by building on our business process
services leadership and accelerating our color leadership. One of the ways that we maintain our market leadership
is through strategic coordination of our R&D with Fuji Xerox (an equity investment in which we maintain a 25
percent ownership interest).
Our total research, development and engineering expenses (RD&E), which includes sustaining engineering
expenses for hardware engineering and software development after we launch a product, totaled $577 million in
2014, $603 million in 2013 and $655 million in 2012. Fuji Xerox R&D expenses were $654 million in 2014, $724
million in 2013 and $860 million in 2012.
Segment Information
Our reportable segments are Services, Document Technology and Other. We present operating segment financial
information in Note 2 - Segment Reporting in the Consolidated Financial Statements, which we incorporate by
reference here. We have a broad and diverse base of customers by both geography and industry, ranging from
small and midsize businesses (SMBs) to graphic communications companies, governmental entities, educational
institutions and Fortune 1000 corporate accounts. None of our business segments depends upon a single customer,
or a few customers, the loss of which would have a material adverse effect on our business.
Revenues by Business Segment
Our Services segment is the largest segment, with $10,584 million in revenue in 2014, representing 54 percent of
total revenue. Note that Services segment revenue excludes ITO revenue due to ITO being reported as a
discontinued operation as a result of the pending sale of this business to Atos. The Document Technology segment
contributed $8,358 million in revenue, representing 43 percent of total revenue. The Other segment contributed
$598 million in revenue, representing 3 percent of total revenue.
Services Segment
We provide comprehensive business services in global markets across all major industries and government
agencies. These services help our clients simplify the way work gets done, providing them more time and resources
to allocate to their core operations, enabling them to respond rapidly to changing technologies and reducing
expenses associated with their business processes.
Our Services segment currently comprises two types of service offerings: Business Process Outsourcing (BPO) and
Document Outsourcing (DO). This segment no longer includes Information Technology Outsourcing (ITO) as a
result of the previously referenced announcement about our agreement to sell our ITO business to Atos and the
reclassification of the business to Discontinued Operations in 2014.
Selling the ITO business gives us the opportunity to bring greater focus to our BPO and DO businesses where we
are competitively positioned and can truly differentiate through our domain knowledge, industry expertise and
innovation. Following the close of the transaction, we will have an ongoing relationship with Atos to provide IT
services to our current BPO customers.
Business Process Outsourcing
BPO represented 68 percent of our total Services segment revenue in 2014. We are the largest diversified business
process outsourcing company worldwide, with expertise in managing transaction-intensive processes. We provide
multi-industry offerings such as customer care, transaction processing, finance and accounting, and human
resources, as well as industry focused offerings in areas such as healthcare, transportation, financial services, retail
and telecommunications. We bring our BPO solutions to market through Industry Business Groups and we deliver
our solutions to our customers through Global Capability Organizations.
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