ACS may be in a good position to get even more business in the next few years as the federal government starts spending billions of dollars to help health care providers create electronic medical records systems. ACS said that health care projects account for about $1 billion of its $6.5 billion in revenue for the year ended June 30. About 40% of ACS revenue comes from government contracts, it added.

Among the Xerox-ACS combination's competition for health care services contracts will be Dell Inc., whose is slated to be completed around the end of this year. Perot claims that almost half of its $2.8 billion in revenue last year came from health care services.

The U.S. is poised to provide billions of dollars to help health care providers adopt electronic medical records technology, and many of these firms may turn to outsourcers to manage the transition, in part, to help meet a federal deadline of 2015 before penalties begin to kick in.

Xerox, with $17.6 billion in annual revenue, will be expanding its own outsourcing business with an ACS operation that includes 14 data centers and command centers located in Dallas, Bangalore, India, and Monterrey, Mexico. The new ACS subsidiary will be headed by ACS CEO Lynn Blodgett.

The two companies will also marry Xerox's technologies with ACS. In particular, Blodgett said during a conference call this morning cited Xerox-developed capabilities for dealing with unstructured data, such as emails.