The only prior indicator that changes were ahead at Xerox was an internal webcast earlier this year describing a plan to cut some research and development engineering costs to one-third of current levels, the affected employee said. Asked about that, McKee said, "we have never said we would reduce R&D spend." The company has said "that we will be shifting our revenue mix to a higher percentage of services, a business that is targeted to grow between 6 and 8% by 2012. To support that, we have clearly indicated our R&D focus will also shift to a services-led, technology-driven business."

He added, "More than half of our revenue now comes from services, we will continue to shift R&D to support the direction the company is moving in."

Burns will have a "huge impact" on what happens to former Xerox employees," said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology who has testified in Congress about the impact of outsourcing. Among the things Xerox will control is how many employees are retained and how many will be transferred to HCL.

"Xerox will also control whether HCL hires American workers or brings in guest workers on H-1B and L-1 visas," Hira said.

What typically happens in an outsourcing agreement is that some workers will be laid off, generally those who are older and have higher salaries, Hira said.