Bye Bye to ‘Made in India'

While not many tears were shed over the recent announcements coming from the HCL and Wipro stables that they were discontinuing their PC manufacturing operations, for many die-hard romantics like me the death knell for Indian PC vendors was indeed painful to digest. I am sure there have been many like me who have witnessed the glory days of Indian brand PCs even in the last one and half decade. And I am certain that this would be even more painful for one generation earlier than me who had been a part of the growing stories of Wipro and HCL in Indian IT.

After all, it was in the 70s and 80s and 90s that through the efforts of men like Shiv Nadar and Ajai Chowdhry and Azim Premji and Ashok Soota that Wipro and HCL began their PC journeys and gradually reached their zeniths. In fact, much before the offshore outsourcing wave had begun, both Wipro and HCL had earned their stripes as PC vendors.

The signs of decay were there for some years. The Wipro announcement was less of a shock since they had stopped being competitive on the PC front a long time back. The business focus had shifted more towards system integration. The writing was already on the wall and the wait was just when the plug would be pulled out. That happened on December 5th, when Wipro decided to pull off its computer hardware manufacturing business. The company declared that it would stop making desktops, laptops and servers under the Wipro brand.

More surprising was earlier in November, when HCL Infosystems announced that it was phasing off its manufacturing business over the next three years as part of a company-wide restructuring that will lead to it focusing more on services and distribution vertical. Though the PC business from HCL has been diminishing in size, it still commanded market shares amongst the top 2-3 vendors. However, HCL too has been shifting its focus more towards system integration and third party distribution and therefore the pull-out decision, though unexpected, was not exactly a bolt from the blue.

The PC business currently accounted for about 8% of HCL Infosystem's overall revenues and has been under pressure for some time now as people started adopting new form factors such as tablets and phablets that are finding more takers. The company had then started distributing tablets and had even won a contract to manufacture 100,000 $35 tablets for the Indian government. However, this tender was cancelled as it failed to furnish a bank guarantee of Rs 60 crore. The company also had some disagreements over pricing with the government and allegedly HCL had listed some additional ‘unacceptable' conditions to the government.

Unlike romantics like me and my ilk, the channel partners seemed to welcome the moves of both Wipro and HCL. Channel partners have different reasons to site for such a reaction but one thing seems clear enough and common among all the partners. And that is Wipro ‘bad service network', while in case of HCL because of very low margins, the business was not sustainable.

And while sepia-tainted nostalgia is good, we must remember in the hard-nosed world of business, the channel partners feel the true commercial pulse of the market and it is pragmatic to acknowledge that their assessment is generally more accurate. And their overwhelming verdict is in the face of the Lenovos, Dells, HPs and Acers and even more challengingly the iPads and Galaxys, the HCLs and Wipros stood no chance and therefore their exits are fait accompli.

Though HCL might not have been the biggest player in PC space here as far as volumes are concerned, its exit might be a sign of things to come. MNCs generally have tie-ups with international brands for getting PCs and a lot of smaller companies are moving away from desktops and shifting to buying laptops for its employees. Those that still use desktops prefer to source them from international companies in case of high-end PCs or build it themselves in case of entry-level devices.

Other Indian vendors like Zeniths, Vintrons and PCLs have gone into oblivion long back, the likes of Xenitis and Chirags proved to be flashes in the pan and now with the demise of HCL and Wipro (the two long standing Indian vendors), one chapter of Indian IT history is closed. The head ackowledges the business realities, but the heart still yearns for those bygone days.