Microsoft downplays Infosys IT outsourcing deal

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, Microsoft, IT Employment


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • What?

    I don't understand why they feel the need to outsource stuff like this.
    • MS already outsources much of its bog-standard internal support ...

      to HP, InfoSys and a host of other vendors and has done for many years.

      All it's key and strategic IT support and operations, however, has always and will always be run by MS employees.

      Why employ expensive MS personnel and have them sitting on the end of a phone waiting for the next password reset or "I can't find the spreadsheet I've just saved" support requests?
  • Same reason many companies do

    to save money.

    IBM, Apple, you name it, no matter what aspect of a business, parts of it is outsourced overseas to save money.
    John Zern
    • Apple

      Apple CLOSED their R&D in India in 2006. Google "Apple software logs out of India". Oh wait.... Apple is booming. LOL.
  • MJ: Two things ...

    1) I think that Infosys' press release was a little - ahem - self-promoting.

    MS has, for many years, outsourced some of its more mundane internal IT support and operations functions to vendors, but the majority of its more valuable IT & support functions are, and will continue to be staffed by MS employees.

    2) You state that MS has caught flack from Wall St. for performing product development outside the US ... and yet, the same Wall St. "analysts" gave MS hell for growing too fast and having too many heads.

    As usual, Wall St. wants to have their cake and eat it.

    Some MS product groups are located outside the US because the key people working on those products are from other countries ... y'know - the other places that aren't the USA. MSMQ, for example, was created and built for many years by a team in Israel until some of them were relocated to Redmond in order to collaborate more closely with other teams.

    Many non-US product groups are working on products or features that are not tightly coupled to other product groups and so enjoy a greater degree of autonomy.

    MS is a global company: More than 50% of Microsoft's revenues come from outside the US. Why not, therefore, have other teams around the world build those products?
    • ahead of itself

      Hi. Yes, totally agree, re: Infosys getting "ahead of itself."

      Re: Wall Street. I actually said Wall Street loves anything MS does to save money, including more outsourcing. And, yes, I know MS products are developed outside of the U.S. by various groups they have around the world. I was pointing out that this "fact" isn't seen the same way by all employees. Some in the U.S. see this as "why we are losing our jobs."

      Sorry if how I stated this wasn't as clear as needed. But that's what I was trying to say... MJ
      Mary Jo Foley
  • Too sensational

    This is not as big as news as you make it out. There will always be segments and "areas" that will always be reamain internal at companies like MS.

    Also, think about the 'partner' benefits from the business side of things. Add in cost benefits and this is just something many companies do IT-centric or not.
    • sensational

      Hi. Yes, I agree it is sensational. But we're getting pretty different takes from Microsoft and Infosys on this, in terms of its significance. As you might expect, MS is trying to downplay it and Infosys to promote it... MJ
      Mary Jo Foley
  • RE: Microsoft downplays Infosys IT outsourcing deal

    Personally I don't like IT outsourcing. It doesn't work. My understanding was that Microsoft already had contractors working for them, they were called red badges or something like that. If all Infosys did was take on all these contractors then I guess it would make sense since they were contractors to begin with. However with that being said Microsoft would get a lot better support if they didn't outsource and kept everything internal. Actually its not just Microsoft, any company that thinks of outsourcing should keep it all inhouse for the best support.
    Loverock Davidson
    • Who cares your likes and dislikes....

      "Microsoft would get a lot better support if they didn't outsource and kept everything internal"

      -->>Tell us how it would work. Probably you would end up in higher plane in corporate world.
      • I care!

        As do my followers. Already explained how it would work.
        Loverock Davidson
        • It RARELY works in practice

          and [b]NEVER[/b] works in principle. Loverock FTW on this one.

          [Corporate America] "Huh?? What is pri pri principle? Wha?"
  • Of course it's an INDIAN company

    Yet another evil corporation who won't help stimulate the economy.
    Infosys is well known to be not only an Indian bodyshop but also one of
    the worst of said companies. So while American programmers and IT
    personnel starve and lose their homes, Rajesh and Deepak will be able to
    earn money at their expense.

    I'm not a Microsoft hater. I actually love .NET and Windows. But this is
    total bullcrap. If less corporations thought the same way Microsoft did,
    we would not be in this recession.
    • Are you for real?

      Microsoft is a global company... strategic operations remain in Redmond and it's outsourced the frontline IT operations in 104 countries... we're not just talking about US jobs here.

      I'm no fan of Indian call centres (for simple reasons of communication issues - line quality, language, dialect, etc.) but frankly I find your attitude is borderline racist. "Rajesh" and "Deepak" are as entitled to a living as the American programmers and IT personnel that you speak of.

      Over the years I've watched many areas of IT specialism become commoditised and as they "shift to the left" they often move offshore. That's just a fact of life. In order to keep our jobs we need to keep our skills relevant and current - no need to "starve and lose [our] homes"
      • Bullcrap

        Are you a shill? It's no secret that the
        problem isn't relevant skills, its the fact
        that companies want to pay peanuts for the work
        we do. That's the whole reason for offshoring;
        none of this "global company" nonsense. It has
        everything to do with COST.

        And yes, American IT personnel are more
        deserving of a living than foreigners.
        Microsoft is still an AMERICAN company. All of
        these offshoring companies who lay off entire
        departments to send the work overseas to cheap
        Indian programmers, or to consulting firms that
        employ H-1Bs or anything like that are doing a
        disservice to their countrymen. In this
        economy there is no need for offshoring work to
        cheaper people, there is no need to import H-
        1Bs. There are thousands and thousands of
        qualified, skilled, AMERICAN programmers and IT
        staff who are looking for work.
        • Not a shill

          Nope, I'm not a shill. I live and work in the UK, and our jobs get offshored too (although outsourcing is less of an issue as there are laws to protect employment).

          I just find it offensive that you consider "American IT personnel are more
          deserving of a living than foreigners". Sheer arrogance and bigotry.
        • Sorry, but your patriotism is skewing your reality

          There is indeed a very real need for companies like Microsoft to import the world's best skills and talent. Back when Microsoft was hiring like crazy, they found it EXTREMELY hard to find REALLY GOOD developers, testers, architects, specialists, marketeers, writers, etc. in the US alone. I know this as I was working with Microsoft at the time and continue to do so today.

          Sure, there are lots of people who work in IT, dev, test, marketing, product management, etc. who are currently looking for jobs, but don't mistake this with the FACT that few of them would survive the MS interview process, much less life within Microsoft itself. MS can be a brutal place for those without the skills and/or drive to succeed.

          If companies like MS could find all the talent at home, why do you think they'd go to the expense of relocating families from around the world to the US?

          And, FWIW, a for-profit corporation has a responsibility to its shareholders to minimize costs as much as is reasonable. If MS can reduce its costs by consolidating all the positions it already outsources to a single vendor rather than several tens of vendors, then it's absolutely right for it to do so.

          Also, don't forget - Microsoft IS a global company whose international subsidiaries generate considerable proportion of its profits. As such, MS has a role to play in each of the regions of the world in which it operates - even those outside the US.
          • More bunk

            [i]Back when Microsoft was hiring like crazy, they found it EXTREMELY hard to find REALLY GOOD developers, testers, architects, specialists, marketeers, writers, etc. in the US alone.[/i]

            Americans are always told this bunk, that they're not skilled enough, more so since they have to fend for themselves without government sponsored tutoring and coddling. Thus ensuring mostly wealthy kids make their way to the upper echelons, or poorer ones who albatross themselves into a mire of debt as they finance their schooling and vocational pursuits.

            Only how ironic that the overwhelming vanguard of the computing industry was born and bred on American soil, and hammered in place by the same American know-how.

            Fast forward to the penny-pinching corpoRATS of today who choose to look conveniently past this, turning their collective backs on giving anything substantial back by way of educational or vocational investments - you know, to ensure the next generation has gainful chances of obtaining similar work and opportunities. You gotta wonder if the newfangled, [i]multi-national[/i] approach has something to do with this phenomenon?

            [Hmmm 1 + 1 = 2 last time I looked. Oh wait, how silly of me, I'm a hopeless Yank@! No wonder the math never adds up!]

            [i]If companies like MS could find all the talent at home, why do you think they'd go to the expense of relocating families from around the world to the US?[/i]

            Relocating people amounts to pennies on the dollar over the long haul. Big business has been doing this same thing for ages now, only turning to the home front first. These modern day honchos outsource and import "talent" for one overriding reason: it's cheaper than paying native sons and daughters decent and gainful wages - and little beyond that bottom line need get in the way.

            [i]And, FWIW, a for-profit corporation has a responsibility to its shareholders to minimize costs as much as is reasonable.[/i]

            "Minimize costs"? Perhaps they could consider reducing to more sane and responsible levels the pay and perks they reward themselves by the millions annually instead? Do you take note of the level of absurdity by which they gorge themselves with annual bonuses alone? Or the scale between what they take in and then toss to their lower-level line workers? Do you care that the disparity between top and bottom grows wider with every passing year?

            This must be more of the corporate "responsibility" you speak of, eh? Only it might be high time for these corporate "movers and shakers" - and their government-in-lockstep pals - to take to take a cue from the poets, lest the growing masses of unemployed, underpaid and "overqualified" grow steadily more reactive and angry at being continually dissed and disregarded.

            [i]And the men who hold high places
            Must be the ones who start
            To mold a new reality
            Closer to the heart

            Philosophers and ploughmen
            Each must know his part
            To sow a new mentality
            Closer to the heart[/i]

            --Neil Peart, Peter Talbot, Closer To The Heart (Rush)
        • I bet he hates that Intel Inventions ad that features Ajay.

          Look at the top positions of every major Silicon Valley outfit. Most of the startups as well. Talent has no boundaries in the global economy. And judging by your rationalization I bet a 10th grader in India probably would do a better job at whatever it is you do.

          Don't be bitter, be better and you might just find yourself employed once again.
        • peanuts

          are you willing to work for peanuts??