Fuji Xerox Australia cuts staff, reabsorbs IT services unit

Fuji Xerox Australia backtracked on its plan to build a standalone enterprise IT services and software division after a little over a year, with what is understood to be most of the employees exiting the business.

The printing equipment manufacturer first announced the diversification strategy on 1 October 2015, with the launch of an IT services and enterprise software division, providing managed IT services, hosting and enterprise content management software.

Fuji Xerox had appointed Brian Pereira as general manager to run the division. Pereira was plucked out of one of FXA's top partners, Viatek, where he had worked since Viatek acquired his managed IT business, CN Group, in 2014.

Fast-forward through a rocky 12 months for the Fuji Xerox Australia, and the business unit has been reabsorbed after what a Fuji Xerox spokesperson called "an intensive review of the market".

Related: Top 5 Benefits of Managed IT Services

The spokesperson didn't call it a retreat, instead telling CRN that the division had been "integrated into the broader Fuji Xerox Australian business. We can confirm it has not been closed down and we are still servicing all existing IT contracts".

"This approach has been taken as part of ongoing efforts to improve operational efficiency across Fuji Xerox, ensure we have a consistent approach to the market throughout the business and provide our customers with the rights solutions to fit their business needs," the company said in a statement provided to CRN.

Fuji Xerox did not respond to questions about redundancies, however, CRN understands that at its height, about 35 people worked at the enterprise IT services and software division, and that most were made redundant or resigned late last year, other than a handful who are continuing to support ongoing contracts.

Pereira confirmed that he parted ways with FXA in November 2016, and LinkedIn shows a number of the division's former staff have moved on.

Channel partner

Part of Fuji Xerox's initial plan was to act as a channel partner for software and hardware vendors that supported document workflows, such as document capture company Kofax, scanning software ABBYY and digital forms provider Intelledox as well as Dell for enterprise hardware.

An FXA spokesperson said: "Fuji Xerox Australia is still supporting and developing solutions with it key partners, and will continue to resell Kofax, ABBYY, Intelledox and Dell."

A spokesperson for Intelledox said the Canberra-headquartered vendor would "continue to build a future" with FXA. "Intelledox is strategic partner of Fuji Xerox Australia and Fuji Xerox Asia Pacific (regional Headquarters based in Singapore)."

However, a number of other well-placed sources told CRN that Fuji Xerox's vendor partnerships had been disrupted by the change in strategy and that some vendors expected a significant reduction in anticipated volumes.

The change in direction will come as no surprise to those who followed Fuji Xerox throughout 2015 and 2016, from the time when Australian boss Nick Kugenthiran retired after decades with the company, and was replaced by former New Zealand boss Neil Whittaker in April 2015.

Whittaker was out the door only a year later amid commentary on his hard-nosed management style and a flurry of speculation about a "win at all costs" price war with competitors.

Chief financial officer Devlin Bell also parted ways with Fuji Xerox Australia in July 2016.

Sunil Gupta, a former Fuji Xerox global board member with decades of Xerox experience, was parachuted in as Australian managing director in July 2016, having spent the previous two months as a compliance officer for Fuji Xerox Asia Pacific. Hideyuki Yamamoto was also brought in as a director of the Australian branch in July 2016.

At a meeting at its corporate headquarters in Tokyo in July 2016, directors of Fuji Xerox Australia also voted to remove the company's auditors, Ernst & Young, and brought in KPMG.

Despite the upheaval, the financial year to 31 March 2016 saw strong sales growth for the 2200-staff Fuji Xerox Australia, with revenues up 8.5 percent to $964 million, as well as a near-$25 million turnaround in its bottom line from a $20.3 million loss in 2015 to a $3.9 million profit.