Wipro to log out of PC manufacturing business

After HCL Infosystems, another IT major Wipro has decided to shut down its manufacturing of computers and servers due to changing market scenario and consumer preferences.

Azim Premji-led Wipro, the country's third largest software services player, said it will re-deploy all the affected employees in the company.

However, the company will continue to have a presence in the hardware business offering solutions in large integrated deals.

"After evaluating the changing market scenario and customer needs, Wipro has decided to strengthen its position as system integrator (SI) and increase its focus on IT solutions and services," Wipro said in a statement.

As a consequence, the company will discontinue manufacturing of Wipro branded desktops, laptops and servers, it added.

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 for some time now 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, it 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.

Wipro will fulfill its warranty and annual maintenance contracts (AMCs) 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.

"All the affected employees will be re-deployed in the company," Ghosh said. Shares of Wipro closed 2 per cent higher at Rs 491.60 apiece.