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Infosys Bags $100 Million from Microsoft

After declining to disclose the value of its outsourcing deal with Microsoft, Infosys CFO today reportedly revealed that it's worth a whopping $100 million.

Bangalore-based Infosys announced Tuesday that Microsoft is outsourcing its IT help desk, PC, infrastructure and application support to them in a three-year deal that involves 450 Microsoft locations in 104 countries.

CFO V. Balakrishnan revealed its windfall to Dow Jones today.  When I spoke with Nataraj, Infosys VP and unit head of infrastructure management Tuesday, he emphasized that the deal will not lead to any job displacement.

Nataraj also said that the work it has picked up was support already farmed out to a multitude of partners in the past -- that this was mainly the consolidation of that work to one partner. "Microsoft has outsourced parts of its internal IT before," notes Directions on Microsoft analyst Paul DeGroot.

Our original news report generated some less than enthusiastic comments. "C'mon Microsoft -- use US-based workers," wrote Bob. "No wonder no one wants to go into the tech field. Even Microsoft drinks the outsourcing Kool-Aid."

Added John: "What bugs me more than anything is that, like anyone who offshores to China or India, the cost of Microsoft products will not be cheaper. On the one hand we're too expensive to employ, on the other hand we live in the U.S. and are paying a premium for goods and services. Well, we may be seeing the last of the great experiment we call the U.S.A."

DeGroot points out that outsourcing of IT support could have other ramifications for Microsoft. For example, with fewer internal operations being performed by Microsoft employees, it could mean that there are no longer as many people internally with easy access to product groups and to highly detailed operational data.

It’s also potentially providing less access to "the world's best Exchange/Windows/SharePoint/SQL Server engineers who they might be able to call on to solve a problem that a lot of customers are having," he said.  

"Microsoft also uses its internal systems to 'dogfood' new products," he added. "For example, new products are often put into full production internally while they are still in external betas. Microsoft users put up with the problems they might encounter because they understand that their experience will help the company make a better product."

Posted by Jeffrey Schwartz on 04/15/2010 at 1:14 PM

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Reader Comments:

Mon, Apr 19, 2010 Deone Hoonoz Florida - USA

…AMERICA, HERE I GO ! Sucking America's strenght and brainpower inside out.

The American Politico-Businessman: The worst businessman in the World.
One for you…one for me…
One for you…one for me…
If it is not Wall Street, it’s Uncle Sam…
If it is not Uncle Sam, it’s Wall Street …And sometimes hand-in-hand.

Short Vision, Incompetence, Arrogance and above all Self-interest and Greed have been the best of skills that have been characterizing managing the American way countless times since the early 1920’s: Managing the country, managing the finances, managing the drug war, managing the illegal immigration war, managing the terrorism war, managing the real wars and managing the international Politics.

Waste anfter waste after waste...
Failure after failure after failure.
From the collapse of banking industry to the collapse of real estate and the mortgage industry, to the collapse of the car industry and the rest of Corporate America, to the collapse of health care, to the impending collapse of Social Security.
It’s like the domino effect that surely leads to the fall of the last piece of domino. The question is NEVER “If”, but ALWAYS “When”.
Then the more visionary players will come to pick up the pieces and share the domino…The Chinese? The Indians? The Europeans? The Russians? The drug Cartels?
Yet they are great talents in this nation that could do a much better job and uplift this nation to where it once belonged... if only those in charge could put their self-interest on the side and listen.

A great wise man once said “Prenez le temps d’écouter bande d’imbéciles, et vous comprendrez pourquoi les choses ne marchent pas”.

Translation – “Take time to listen pack of idiots, and you'll understand why things do not work”.

Mon, Apr 19, 2010 This sucks for IT

Why isn't the Sarah Palin doing something about this? I guess she just isn't interested in anything that helps "real" Americans.

Mon, Apr 19, 2010

Oh great, more money going out of the country tax free.

Sat, Apr 17, 2010

If India or China are going to be the market for these large corporations then protectionism will kill the world. If Europe or Americas need to grow, they need Asia to be supportive in the new world order. The world is flat. Are you looking at the big picture or still trying to protect the people from a short term perspective of the respective countries. The faster you remove the hood the more efficient every country in the world going to be.

Fri, Apr 16, 2010 Microsoft Greed

Total greed. $150M could of hired 2,000 American, Canadian or European programmers @ $75K USD /yr The “global” playing field will only be level when it is no longer cost effective for companies to hire labor in India, China and other popular outsourcing destinations. America needs to enforce a “VIRTUAL FOREIGN EMPLOYEE” tax on all US corporations that hire foreign employees to work on US based projects. If skilled engineers from foreign countries want to work for US corporations on product versions that will be sold to US consumers then allow these skilled foreign engineers do it from the US headquarters of these corporations not from their home countries such as India. Until a “virtual foreign employee tax” is enacted no one in America could compete with someone in India or China as a lot of people living in those countries could afford to live on $5,000 USD /yr. It’s not a matter of skill or education those are cop out excuses the real decision about outsourcing is cost and payroll savings. Trust me I know I am a former Senior EVP of a large Fortune500 technology company and I was in charge of locating and managing the company’s outsourcing partners. I hope Obama tackles this issue. I hate seeing our country in this situation.

Thu, Apr 15, 2010 Pam

Are you kidding me? And they wonder why the job market is so bad in this country. I work in a large organization in the US and about 7 out of 10 IT workers are Indian as well. These are the good paying jobs and I wonder how many Americans at Microsoft are going to be layed off now.

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