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It will take at least 12-15 months for the India operations of Hewlett-Packard (HP) to feel the impact of the global decision to split the company into two. On Monday, one of the largest American information technology firms said it would separate its computer and printer businesses from its corporate hardware and services operations. While the former has been lagging for a few years due to popularity of new-age form factors, the latter has been growing at a faster clip.
According to a senior official at the company’s India operations, after Monday’s decision, there is a likelihood of HP operating as two different companies in the country with two different chiefs. However, it will not happen before end-2015 or mid-2016. “These kinds of changes take quite a lot of time to happen… First they get implemented globally then the implications are felt across various countries,” said the official, who did not wish to be identified.
Even though HP has lost its No 1 position globally as the seller of PCs, in India, the company continues to dominate the market with a 30 percent share in the second quarter of the current calendar year, according to research firm IDC. The firm’s research and development centre in India is said to be the largest outside the US, though the official number of employee base is not available.
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HP said in a statement the shareholders would own a stake in both businesses through a tax-free transaction next year. Each of the units contribute half of HP’s revenue, which is expected to be $112 billion in the financial year ending October.
“As you know, customers buy personal computers, printers, notebooks differently from how enterprises buy them. So, it is two different audiences and two different markets… It is a good decision and with time we will know the logic behind it,” said the official cited above. Till the businesses are formally split, it will be business as usual at the India operations of the company.
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“Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates,” Ralph Whitworth, former HP chairman and founder of Relational Investors LLC, said in a statement.
