Reach and service to help Xerox re-invent India biz


Sayantani Kar, June 16, 2013
What more could a brand want but be synonymous with its generic category? Who would not want to be a Colgate (Colgate-Palmolive) in the toothpaste space, a Band-aid (Johnson & Johnson) in bandages or a Google in online search engines? Till a few years ago, one could have piped in, "Or, a Xerox in photocopying?" But not anymore. Remember what happened to Kodak, despite its legacy in cameras? Xerox, the Connecticut-based technology company, wants to avoid a demise like that.

With xerography driven to extinction by digital photography and printing mechanisms, Xerox's mainstay in photocopying has been under threat for years. Companies with heritage in cameras and lenses have stormed into the market ever since. Xerox took the call to avoid the fate of legacy brands which were caught napping when the world changed, and started diversifying into IT-services such as business process outsourcing (BPO). Albeit, with acquisitions along the way, but also by re-aligning its own brand. So much so that, Xerox gets 50 per cent of its global revenue from its services business.

In India, Xerox's transformation has been made a part of the senior management's KRAs (key result areas in appraisals). Xerox India Managing Director Rajat Jain says, "My top team, about 10 of us, have KRAs that include the transformation of the Xerox brand. The goal is to shift the brand from being synonymous with photocopying to being known for being a diversified IT company, which is into printers and BPO."

Even though BPO, especially after the global parent's acquisition of Affiliated Computer Services (ACS) in 2009, has been the thrust of its services strategy, India has not signed up any clients for it yet. Services from Xerox India are mainly document management services (global document outsourcing) that handle anything from document supply management, data processing services to managed print services. "Ït is growing faster than our technology business (machines)," says Jain. The BPO and the global document outsourcing together comprise Xerox's service's side. The BPO business still gets serviced out of India with 10,000 people in India but cater to Xerox' global customers. The document management business brings in about 30 per cent of Xerox India's revenue for now.

However, Jain says his team still has to work on familiarising the CxOs with Xerox's service facet. "My core audience include CIOs and CEOs. We need to pro-actively tell them of the different services we might be rendering in markets in Japan, for example, and which can be done for them in India too,"says Jain. He has radar around 800 CIOs, 35-40 government officials and around 5,000 small and medium businesses to hold these conversations with.

However, while services are relatively new for Xerox, multifunctional devices such as printers and copiers, was a market for Xerox to lose. It has had grief from players such as HP, Canon, Konica Minolta and Ricoh in various segments (see chart for Xerox's slide). Mohit Raizada, senior market analyst (Imaging, Printing & Document Solutions), IDC Centre for Consultancy and Research, says, "There are two categories in Laser market in which Xerox operates, one which is printer-based lasers where HP and Canon are strong and copier-based laser printers in which Canon and Ricoh are strong. Xerox is trying to regain share by restructuring its ecosystem." While in A3 copier-printer (office-use) segment, the likes of Canon, Ricoh and Konica Minolta lead, in the A4 space, which is the most consumer-oriented, HP, Canon, Epson and even Samsung have a strong footing.

Jain says, "We don't sell on price. We are also more focused on laser printers which are higher priced than inkjets. In products for the graphic production community (jobbers) such as production printers, we have over 40 per cent of share. In offices, both government and private, where A3 printers work, we have around 15 per cent. And, a low single digit in the A4 space."

The appointment in 2012 of Jain could help the company understand the consumer-facing segments better. With stints in FMCG companies such as HUL and media outfits such as Walt Disney, Jain says understanding the distribution tactics in India is key for most MNCs to do well. Ramu Ramanathan, group editor at PrintWeek India, says, "What Xerox has been really successful in is its service support. It has been always popular with jobbers for digital printing. But servicing them even in remote areas has been enabled by its good vendor support."

Since 2010, even before Jain had joined, Xerox has been revamping its distribution in India. Shifting from a direct distribution model with its Indian partner, ModiCorp, it has been adding partners to sell its products. "We are increasing our coverage with new private limited companies as our partners since the last four-five months, adding 30-40 more to the existing 100 for the A4 segment."

Even though Xerox is renewing its interest in B2C segments, it will eschew mass advertising and depend on its overall 300 partners for its various product sales. Road shows and retailer meets will supplement them. Partners will also bolster its weak spot in getting government business which generates a lot of demand in the A3 space.

But it is time for Xerox to look beyond the hardware business. Afterall, even in printer-copiers, there is a thriving second-hand market which makes it difficult for original equipment manufacturers to track sales. It also poses a challenge to recurring revenues from sale of genuine cartridges and the chance to upgrade the same consumers to more advanced technologies.