Microsoft India to hike prices of business software by 6% from Feb 1

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Technology giant Microsoft India announced a price hike of 6 percent in both its commercial on-premises software and online services which include Microsoft 365, and Dynamics 365, effective from February 1. This will be the third consecutive year of price increase by Microsoft in India following a significant adoption during the pandemic years.

The Indian rupee pricelist changes is to harmonise the prices for commercial software and online services between India and the prevailing USD pricing levels in the Asian region, the company said in an emailed notification to its enterprise customers on December 6. A copy of the email was accessed by Moneycontrol.

“Microsoft periodically assesses the impact of its local pricing for software products and online services to ensure there is reasonable alignment across regions and this change is an outcome of this assessment,” the company said in the email.

According to the email, the revised Indian rupee prices for direct sales to India-based customers for a select set of online services such as Microsoft 365, and Dynamics 365 will be reflected on on Microsoft.com from February 1.

These changes, however, will not affect existing orders by business customers under volume licensing agreements for products that are “subject to price protection.”

“Prices for new product additions under such volume licensing agreements and purchases under new contracts will be as defined by the pricelist at the time of order. Customers across India buying online services in Indian rupee will continue to find Microsoft cloud offerings highly competitive,” the email added.

For sales via Microsoft resellers, the final prices and currency of sale will continue to be determined by resellers.

Third year of price hike

Microsoft saw significant adoption of its business suite offerings in India during the pandemic, driven by sudden surge in adoption by small and medium-sized enterprises (SMEs). This led to the company announce its first ever price increase in India after a span of nearly a decade in February 2022. There was a price hike of about 20 percent.

In the following year, from February 2023 onwards, Microsoft had hiked prices in India by another 11 percent, in an indication of the company focusing on capitalising its increased user in India amidst macroeconomic headwinds and slowdown in cloud adoption globally.

These frequent price updates will be have an impact on small businesses and SMEs who have limited technology budgets and have just started digitising using Microsoft’s services in the past couple of years.

As of financial year 2023, Microsoft’s India business has reported a 30.2 percent growth in net profit on a year-on-year, touching Rs 648.67 crores.

Consolidated revenue for FY23 stood at Rs 19,353.79 crore, growing 39 percent YoY, up from Rs 13,922 crore in FY22.