Microsoft Lands UK Cloud Deal

CSC has won a contract to provide IT support for 30,000 employees of the United Kingdom's postal service that will be using Microsoft's cloud-based offerings for e-mail, collaboration, and chat. It's a big win for Microsoft Online, and also shows how outsourcing companies are adapting their businesses to cloud computing.

CSC is calling the deal an "expansion" of its current contract with the U.K.'s Royal Mail Group, signed in 2003, for desktop and server IT support. Under the new terms, CSC will set up employees with Microsoft's Business Productivity Online Suite, introduced this year, which includes Exchange, SharePoint, Office Communications, and Office Live Meeting, hosted in Microsoft data centers and purchased on monthly subscriptions. CSC will also provide help desk support to employees for those applications.

CSC is the first Microsoft partner "to lead and win a cloud computing services agreement of this scale," the outsourcing provider said in a statement issued Monday. CSC is one of the world's largest IT outsourcing providers, with 92,000 employees and $16 billion in revenue last year. Royal Mail Group's head of technology service delivery, Carol Olney, said the deal is part of the postal service's goal to invest in new technology to improve efficiency and customer service.

Cloud computing threatens to take away business from IT outsourcing companies, since many of the benefits are the same: Reduced costs, less internal development of software, reduced management of applications and hardware. That's why companies such as CSC are looking to adapt and participate in the trend toward cloud computing. CSC now offers "cloud services," which are designed to help businesses "easily and securely adopt cloud computing solutions, allowing them to reduce the costs of managing and maintaining business systems while giving them access to the latest Microsoft Online Services," the company said in its statement.

Meanwhile, Microsoft has recently stepped up efforts to sells its online applications as Google intensifies its efforts to replace Exchange/Outlook and IBM Lotus Notes on desktops. Earlier this month, it dropped its prices by up to 50% on Exchange Online. Companies using or migrating to Exchange Online include GlaxoSmithKline, with 110,000 seats, and Aon, with 36,000 seats.