In a surprising development, Wipro, India’s third-largest IT services exporter, on Wednesday announced that it would discontinue with its hardware business, which includes its branded desktops, laptops and servers. The company also said that all the affected employees would be redeployed within the organisation.
In a notice to the BSE, a statement from Wipro said, “After evaluating the changing market scenario and customer needs, it has decided to strengthen its position as a system integrator and increase its focus on IT solutions and services. As a consequence, the company will discontinue manufacturing of Wipro branded desktops, laptops and servers.”
The IT products or hardware segment is a sizeable business for Wipro recording a revenue of R937 crore for the second quarter of second fiscal. However, the operating income or Ebit was a mere R15.2 crore.
According to experts, Wipro had less than 4% market share in the PC market. HCL has already done that and Indian companies could not grab a requisite market share to gain a scale that would make the business viable. Experts feel that Indian players were selling older models and with wafer thin margins in hardware business, these companies bled.
Wipro has a long history of hardware manufacturing having first entered into a JV with global PC major Acer. It currently has two plants in Pondicherry and Uttarakhand manufacturing a range of products under its own brand name.
Wipro Infotech head Soumitro Ghosh said, “Manufacturing our own PCs was not giving us a competitive differentiation in our system integration solution offering.”