Microsoft downplays Infosys IT outsourcing deal

Summary:It feels as though Microsoft execs may have been caught more than a bit off-guard by an announcement from Infosys on April 13, which was headlined "Infosys Technologies to Manage Microsoft's Internal IT Services."

It feels as though Microsoft execs may have been caught more than a bit off-guard by an announcement from Infosys on April 13, which was headlined "Infosys Technologies to Manage Microsoft's Internal IT Services."

It took a few hours, but I just received a statement from the Redmondians about the deal:

"This is simply a consolidation of work that used to be provided by multiple vendors to a single provider, Infosys. Microsoft has had a concentrated effort to be more efficient and save money. This was a major area where it could do this. This new contract will not impact internal resources."

When I followed up with the spokesperson, as to whether Microsoft was going to be outsourcing more of its internal IT than in the past, I was told, "Nothing is changing as far as allocation of what Microsoft does internally and what is outsourced."

This wasn't my impression from a quick read of Infosys' press release today. Longtime Microsoft partner Infosys said it had signed a three-year deal -- the dollar value of which it was not willing to disclose -- to "manage internal IT services for Microsoft worldwide." Among the services it would be providing were IT help desk, desk-side services, infrastructure and application support for a variety of products in 450 locations across 104 countries. Infosys officials said they were partnering with Unisys for some of the desk-side support and service-desk services.

I asked Infosys for more details on the deal and have yet to hear back. See their responses below.

As my ZDNet blogging colleague Larry Dignan noted, when a company like General Motors outsources IT, it doesn't raise eyebrows. But wouldn't one think an IT-centric company like Microsoft would be well-equipped to manage its own IT operations? Who better to deploy and maintain Windows 7 than the company that developed it? After all, Microsoft often cites its own IT learnings, dogfooding, etc., as helping the company make its own products better.

Microsoft also has been roundly criticized in the past by many of its own employees for outsourcing more product development, support and other functions, leading to a need for fewer jobs. Wall Street might love Microsoft outsourcing to save money, but, understandably, laid-off Softies might feel differently...

Update: Here's more from Infosys' Anand Nataraj, Vice President and Unit Head Infrastructure Management Services:

1. Was Infosys already an outsourcer for Microsoft IT before now? In other words, is this an extension of an existing contract?

Yes, Infosys works currently with Microsoft. More than 90 percent of this work is new business for Infosys. Infosys currently provides several other services to Microsoft.

2. Is anyone talking about the dollar value of the three year deal? How many Microsoft folks is Infosys providing IT services for at Microsoft?

We cannot mention dollar value of deal nor the number of folks working on the deal. Kindly note this is a global agreement covering all facilities and partner ecosystem of MSFT.

Update (April 15): One high-ranking Infosys exec has been quoted as saying the deal is worth more than $100 million.

3. Is MS still doing any part of its own IT services? If so, what?

Yes, MS has retained strategic functions in IT.

4. Is Infosys working with any other contractors to provide these services?

It is an end-to-end deal managed services deal where Infosys is the prime. Infosys has a partnership model which is combination of Global and Regional partners across geo's [geographies] to address end to end needs for our global customers. Unisys is  strategic partner for deskside support and multi-lingual service desk.

Topics: Outsourcing, CXO, Data Centers, Enterprise Software, IT Employment, Microsoft

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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