Smartphone Maker HTC To Exit India, Lays Off Most Of Its Workforce Here

Taiwan-based consumer electronics company HTC is exiting the Indian market and has retrenched most of its 70-80 member team, with a few exceptions.

Senior executives in India like country head Faisal Siddiqui, sales head Vijay Balachandran, and product head R Nayyar have put in their papers. However, chief financial officer Rajeev Tayal still remains in the company.

Even as it exits India, HTC is not yet dissolving its Indian operations completely as it plans to sell virtual reality devices online with Taiwan completely controlling Indian entity, but this will be an extremely small business.

The company is now ending all its distribution agreements in the country; it halted local manufacturing almost a year ago.

An HTC spokesperson said the company would continue to sell its smartphones in India. Since India is an important market for HTC, the company will continue to invest in the country “in the right segments and at the right time.”

Inc42 had recently reported that HTC was planning to lay off nearly a quarter of its workforce by cutting 1,500 jobs in its manufacturing unit in Taiwan. The move will reduce the company’s employee count to less than 5K people worldwide. In 2013, it had a global employee strength of 19K.

In June, HTC reported that its sales declined by nearly 68% from $226 Mn (T$6.9 Bn) in June 2017. Its May sales dipped from $80 Mn ($2.45 Bn) in 2017 to $72 Mn ($2.2 Bn) this year. The company continues to lose customers amid intensifying competition with nimbler manufacturing rivals.

The spokesperson added that the recent reduction in workforce in the India office is designed to more appropriately reflect local and regional market conditions, and will help HTC advance more effectively into a new stage of growth and innovation.

“There are still more than 10 employees in the India office providing full functionality,” she said.

However, not everyone sees it as a goodbye. An executive reportedly said that HTC may look at re-entering the Indian smartphone market as an online exclusive brand, but that will be only after it’s able to turnaround sales globally as the brand is struggling in several markets.

This comes at a time when HTC is already in trouble with some distributors in India, who are planning to take legal action against the company for non-payment of dues and not compensating for stock in the trade pipeline.

The distributors claim that HTC owes money running up to several crores INR. HTC was nationally distributed in India by Optiemus Group firm MPS Telecom and Link Telecom.

The HTC spokesperson said the company is aware of the potential disputes, but can’t comment on the matter till it has full details. “We are working with channel partners to ensure no disruption on business and service to our customers,” she said.

The last two launches of HTC in India failed to get traction. A distributor said that without any marketing, sales have been negligible.

According to a Counterpoint Research report, HTC has less than 1% share in India, while Samsung, Apple and China’s OnePlus dominate the INR 30,000-plus premium smartphone market in India, together accounting for 95% of the market.

Recently, in a June 2018 report, Counterpoint Research revealed that Xiaomi-led online platforms with a share of 57% during Q1 2018, followed by Samsung (14%) and Huawei (Honor) (8%).

According to a Morgan Stanley report, India’s mobile market is growing at 23% CAGR. Another report by Groupe Speciale Mobile Association (GSMA) hinted that the country’s mobile market crossed 5.7 Bn mobile phone users and 340 Mn smartphone users in 2017.

[The development was reported by ET.]