Microsoft Outsources Its Back Office, Boosts Dividend

Microsoft is doing some internal house cleaning.

The software maker has been quietly outsourcing its back office operations to service provider Accenture over the past several months, Accenture disclosed Thursday.

The two companies struck a seven-year deal earlier this year, Accenture said. Under the pact, worth $185 million, Accenture will handle a range of finance and accounting functions for Microsoft, including accounts payable and travel and expense management and general ledger maintenance.

Accenture also is providing Microsoft with a number of procurement services, including requisition-to-purchase order processing.

Microsoft chief accounting officer Frank Brod said in a statement that the companies are "a few months into the program." Brod said he is "pleased with the progress and speed of the transition."

Accenture did not specifically disclose the location from which it's providing the services, but the company has been aggressively building up its footprint in India in order to tap the country's army of low-cost, white-collar workers. Accenture will have more employees in India than in the U.S. by year's end, company officials have stated.

Outsourcing to India allows businesses to cut back-office costs by anywhere from 15% to 40% experts say, although the rising rupee has been gnawing away at those savings of late.

To provide some of the services, Accenture is using Microsoft's own Dynamics AX platform, a multi-language, multi-currency ERP system that automates routine business functions.

Separately, Microsoft on Wednesday said it has boosted the quarterly dividend on its shares by a penny to $0.11 per share. The dividend is payable on December 13, 2007, to shareholders of record on November 15.

Microsoft has consistently raised its dividend over the past several years in one penny increments. In early trading Thursday, Microsoft shares were up slightly to $29.01.