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The information technology (IT) business has always been something of a tough one, with a lot of competitors involved in many different aspects of this broad technological field. IT outsourcing, meanwhile, is one of those fields, and for years, Xerox was a part of it. But that particular field is one in which Xerox no longer wishes to participate, as reports have emerged saying Xerox has sold off the IT outsourcing business to French IT company Atos SE in a deal reportedly valued at $1.05 billion in cash.

If that sounds like an odd amount, it's because that's just part of the deal. The deal reportedly also calls for an additional $50 million to come into play at closing, depending on “the condition of certain assets,” a point which wasn't elaborated on much but does make some sense. Ursula Burns, who serves as both chairman and CEO of Xerox, offered up some comment on the arrangement, saying that Atos was a company that had “...a long relationship in several capacities” with Xerox proper, making it a fine choice for Xerox to offload the IT outsourcing business to.

The deal indeed works out well for both sides here; not only does Xerox get a substantial cash infusion and the ability to take that cash and focus on other business, but Atos gets to substantially increase its operations in the United States to almost triple in size, by some reports. Thanks to the deal, Atos gets the opportunity to add the list of Xerox IT outsourcing clients to its own operations. Xerox, meanwhile, will be putting its newfound cash infusion to work focusing on business process outsourcing (BPO) as well as document outsourcing instead, and will even make Atos one of the new front-runners in terms of IT service providers for Xerox itself. Even those clients formerly handled by Xerox get something of a boost; Atos has its own line of IT services that can be put to work, and may not have been part of said companies' roster before now.

While it's regularly heard in the business community that diversification is important—it allows for better weathering of downturns—it's also possible to be too diversified, to be split in so many directions that it's hard if not impossible to bring the full force of a company's talent to bear on one particular project. Becoming too dependent on any one line of business isn't a good thing for a company's long-term health, but splitting focus too far results in less than the best being given at any particularly venture. Xerox may well have been feeling the effects of just such a move, and as such, has moved to divest one line of business among several in order to better re-orient itself on the remaining business lines.

Whatever the full motive was behind this, both Xerox and Atos are in better positions now than when both began the deal-making, and that's the best kind of deal to see. Xerox has better focus and a cash infusion, Atos has a huge new line of business. Both should come out better for the arrangement, and in the end, that's the best deal to be made.