Wipro to log out of PC manufacturing business

Bangalore: India’s third largest software exporter Wipro Ltd has decided to exit its hardware business, after years of underperformance from the division.

The decision also comes months after it said it did not see a pick-up in sales for its personal computers, laptops and servers.

Like rival HCL Infosystems, Wipro said late on Wednesday that it would discontinue manufacturing of desktops, laptops and servers. The company said all affected employees from the hardware business would be redeployed in the company in other roles.

“Our vision is to strengthen our position as a leading system integrator. Manufacturing our own PCs was not giving us a competitive differentiation in our system integration solution offering,” said Soumitro Ghosh, senior vice-president and head of Wipro Infotech.

Wipro’s decision to exit the hardware business comes at a time of waning demand for personal computers from a generation of data-hungry consumers who are fast switching to devices such as smartphones and tablets. Even global personal computer giants such as Hewlett Packard Co. and Dell Inc. have suffered due to this shift.

Wipro manufactures personal computers, including desktops and laptops, as part of information technology (IT) services contracts with various companies and government agencies in India. The company’s hardware business does not cater to consumers directly.

Wipro added that it would be present in the personal computer market through software services it provides in large integrated deals.

“Wipro has decided to strengthen its position as system integrator (SI) and increase its focus on IT solutions and services,” PTI quoted Wipro general manager and business head (systems and technology), S. Raghavendra Prakash, as saying.

The decision is in contrast to what Wipro had said earlier in the year. In an interview with Mint in August, Wipro’s then head of the infotech business Anand Sankaran had said that the company had no immediate plans of discontinuing the hardware business, but warned that he did not expect to see an improvement in hardware sales until the rupee stabilized. Sankaran has since then left Wipro and joined Dell.

“This (hardware) business continues as it is… We’ve evaluated those options and, as of now, it continues to stay with us,” Sankaran had said in the interview. “The hardware business gives us a lot of services opportunities—such as system integration, downstream managed services opportunities, etc... It gives us more downstream revenues.”

Sales from the hardware business have been consistently declining over the past three years and some experts had said that the company should hive off the business. In the June quarter, hardware sales fell about 7% from a year ago. In the September quarter, revenue from the business stood at $150 million, with operating profit less than 2% of total sales.

Shares of Bangalore-based Wipro rose nearly 2% to close at ₹ 491.60 on Wednesday on the BSE. The benchmark Sensex lost 0.70% to close at 20,708.71 points.

PTI contributed to this story.