India's Wipro moving non-IT businesses out of the company

Businesses like consumer care and lighting will be shifted to a separate company

Wipro has decided to move its non-IT businesses out of the company to give it a higher focus on IT services, it said Thursday.

The Indian outsourcer said its board approved the demerger of the company's non-IT businesses such as consumer care, lighting, furniture, hydraulics and medical diagnostics into a separate company to be named Wipro Enterprises.

In the company's first fiscal quarter ended June 30, IT services accounted for 78 percent of Wipro's total revenue.

While Wipro will continue as a publicly listed company that will focus exclusively on IT, Wipro Enterprises will be an unlisted company.

The outsourcer needs to do more to revive its IT business which has seen revenue growth in U.S. dollar terms fall for over four quarters, analysts said.

"This plan is not a dramatic development as Wipro was already focused on IT which is the largest source of revenue," said Sudin Apte, principal analyst and CEO of Offshore Insights, a research and advisory firm. The company's non-IT businesses are small, and operate quite independently of its IT business, he added.

Wipro's IT services do not differentiate the company from its competitors as it is still focused on technology, improved productivity, and cost-cutting, which though relevant, do not meet customers' requirement to have technology transform their businesses and make them more efficient, Apte said.

The decision comes a day ahead of the company announcing its financial results for its fiscal second quarter ended Sept. 30.

In the previous quarter, Wipro reported that its IT services revenue was US$1.5 billion, a year-on-year increase of 8 percent, which was lower than the 17 percent growth the company recorded in the same quarter last year.

This demerger is subject to Indian court approval and regulatory approvals, and is expected to be completed by Wipro's next fiscal year which begins April 1, 2013.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

Tags business issuesoffshoringservicesoutsourcingwiprorestructuring

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service

Comments

Comments are now closed.

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?