Ursula Burns, chief executive of the $19.5bn (£13.6bn) turnover business, said the group was undertaking a strategic review of its operations last autumn.
Announcing the break-up plan today, Burns said: “Today Xerox is taking further affirmative steps to drive shareholder value by announcing it will separate into two strong, independent, publicly traded companies."
The two businesses will be Document Technology (including production printing) with sales of circa $11bn (£7.7bn), and Business Process Outsourcing with turnover of around $7bn.
She said the two entities would be in a position to "lead in their respective rapidly evolving markets", with opportunities to expand margins and increase market share.
“I am confident that the extensive structural review we conducted over the last few months has produced the right path forward for our company. We will now position the companies for success and execute our plan to separate them in the shortest possible timeframe while continuing to focus on achieving our 2016 goals,” Burns added.
The names and leadership teams for the two separate operations are yet to be decided.
At the same time as the split, Xerox announced a three-year "strategic transformation programme" expected to yield savings of $2.4bn.
The Wall Street Journal had reported yesterday that Xerox was planning to divide its operations into services and hardware, including its printer business.
Since the strategic review last year, billionaire US investor Carl Icahn had revealed that he has taken an 8.1% stake in Xerox, making him its second-largest shareholder. The WSJ said that Icahn has been pushing the Xerox board for change, and that he will receive three seats on the board of the BPO part of the business after the split. This has now been confirmed.
Xerox employs around 130,000 people worldwide. Its share price has slumped in the face of declining sales and profits, and it currently has a market capitalisation of $9.3bn. Its share price rose by 2% to $9.42 after the announcement.
HP split into two companies: Hewlett-Packard Enterprise and HP Inc, in November 2015.
