Dell Inc. will phase out
its hardware design unit in Bangalore as it relies more on contract manufacturers
capable of doing design to get its products to market.

Dell told employees at a meeting on Tuesday that the center will now focus
on software development, and hardware design will be shifted from Bangalore
to design centers in Austin and Taiwan, according to sources. Dell had hinted
at this move some months ago, and had linked it to Dell's strategy to use more
contract manufacturers, or ODMs (Original Design Manufacturers), to design its
products, the sources said.

Set up in 2004, the hardware design operation was relatively new in India in
comparison to the software development work being done in India by Dell.

A Dell India spokeswoman said on Thursday that the decision to move hardware
design out of India reflected a decision by the company to focus on software
development, testing, and documentation in India. "This is in line with
our higher focus on solutions, which requires a lot of software development,"
she said.

The company had over 500 staff doing software development and hardware design
in India, and of these less than 100 will be affected by the phasing out of
hardware design in the country, the spokeswoman said. The hardware design unit
had designed a dual-socket server and a storage product, she said.

The Times of India newspaper reported that estimates of the number of people
losing their jobs as a result of the shift vary from a few dozen to about 170
people.

Besides software development and hardware design, Dell also has customer support
centers in India, that service its customers worldwide. The company announced
last year that it plans to double the number of staff it employs in India to
20,000 in three years.

IDG News Service

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