Wipro quits PC and server manufacturing business, will focus on IT services

After HCL Infosystems, another homegrown PC maker, Wipro, has decided to quit manufacturing of computers and servers to sharpen its focus on IT solutions and services business.

The country's third largest software services player, which has started marketing indigenous personal computers in 1985, has manufacturing units in Kotdwar (Uttarakhand) and Puducherry. The two facilities have a combined capacity of about 2.20 lakh units of desktops, laptops and servers.

"The market is changing and so are the customer needs. Consumers are looking at smart devices like tablets while the enterprise space has seen more commoditisation (of IT). Wipro has decided to strengthen its position as system integrator (SI) and increase its focus on IT solutions and services," Wipro General Manager and Business Head (Systems and Technology) S Raghavendra Prakash told PTI. He declined to comment on the number of employees in the PC manufacturing business. However, sources suggest the number is lower than 2,000.

Wipro will re-deploy all the affected employees in the company, Prakash said adding that the company will continue to have a presence in the hardware business offering solutions in large integrated deals. Last month, HCL Infosystems said it will phase-off its manufacturing business in the next few years to improve margins and increase organisational efficiency.

Instead, HCL Infosystems will instead focus on strengthening its services and distribution verticals. Revenues for PC makers have been under pressure as newer devices like tablets and phablets are finding more takers. Also, over the last few years, most PC makers in the country have incurred losses due to the rupee's fluctuation against other currencies, especially the US dollar. This has hurt the PC business in India as it is low-margin and almost 90-95 per cent of the components are imported.

Wipro will, however, be present in the PC market by providing suitable brands as a part of its solutions offerings in large integrated deals, the Azim Premji-led company said.

"Our vision is to strengthen our position as a leading SI. Manufacturing our own PCs was not giving us a competitive differentiation in our SI solution offering," Wipro Infotech Senior VP and Head Soumitro Ghosh said in a statement. Wipro will fulfil its warranty and annual maintenance contracts obligations as per the terms of the existing contracts, he added.

The company will execute all customer commitments and provide support services to the entire installed base as part of its regular managed services offering, Wipro said.