Microsoft's Outsourcing Software Management clause turns on one definition — the Authorised Outsourcer — and one condition almost everyone gets caught by. Here is what the three sections actually say.
Microsoft has provided further clarity on its ‘Dedicated Hosted Cloud Services’ with an update to the terms, most notably to the Outsourcing Software Management clause. As ever, the detail sits in Microsoft’s Universal Licence Terms.
The clause has three primary sections. All three turn on one central concept: the Authorised Outsourcer. Get that definition wrong and none of the rest applies to you.
Microsoft defines an Authorised Outsourcer as any third-party Service Provider that is not a ‘Listed Provider’, and that is not using a Listed Provider as a ‘Data Center Provider’ as part of the outsourcing service.
Listed Providers are currently Alibaba, Amazon, Google and Microsoft itself. That list is Microsoft’s to maintain and it has changed before, so check the current Product Terms rather than relying on a list you wrote down at the last renewal.
The practical consequence is straightforward but easy to miss. A hosting partner can look entirely independent and still fail the test, because what matters is not only who you contract with but whose data centres sit underneath them. A provider running your dedicated hardware inside a Listed Provider’s facility is not an Authorised Outsourcer for these purposes.
The first section allows a customer to use licensed copies of the software on devices that are under the day-to-day management and control of an Authorised Outsourcer. The condition is that all such devices are, and will remain, fully dedicated to that customer’s use.
“Fully dedicated” is doing real work in that sentence. It is a continuing obligation, not a state you establish at the point of signature.
The second section addresses customers with subscription licences, and customers with licences carrying active Software Assurance — including Client Access Licences (CALs). It confirms that they may use licensed copies of the software on devices including shared servers, again under the day-to-day management and control of an Authorised Outsourcer.
This is the section that opens up genuine flexibility, because it removes the dedicated-hardware requirement. The definitions of what constitutes a Licence, a CAL and a Server are all set out in the Universal Licence Terms, and they are worth reading rather than assuming.
The third section covers customers with active subscription licences, and licences with active Software Assurance including CALs. Those customers may access their licensed copies of software where the software is provided by a Cloud Solution Provider – Hoster and installed on that partner’s devices.
One word in the above carries most of the risk: active.
If you hold a perpetual licence but have allowed the Software Assurance to lapse, you do not qualify for the Flexible Virtualisation Benefit, and you do not qualify for Outsourcing on Cloud Solution Provider – Hosters. The licence itself is still valid. The outsourcing right attached to it is not.
This trips organisations up because SA lapses are quiet. Nothing stops working, no service degrades, and the deployment that depended on the benefit carries on running in a state that is now non-compliant. Confirm your Software Assurance is active before committing to either route, not afterwards.
The second thing to confirm is the Authorised Outsourcer status of your chosen partner, against the criteria above rather than against their marketing.
And Microsoft is explicit about where the responsibility sits:
Customer is responsible for all of the obligations under its volume licensing agreement regardless of the physical location of the hardware upon which the software is used.
Outsourcing the hardware does not outsource the licensing obligation. If the partner has it wrong, it is still your finding.
Every provision above depends on a fact about your entitlement that you need to be able to evidence on demand — whether Software Assurance was active, and for which licences, at the time the software was deployed.
That is an entitlement management problem rather than a hosting one. In CerteroX SAM it is handled through Microsoft Licence Statement import, subscription flags with expiry tracking, and transaction capture across volume licence, retail, OEM and FPP purchases, so the SA position for a given licence is a record rather than a recollection. Agreements, transactions and exclusions carry an audit trail behind them.
The deployment side matters as much. Server core and processor licensing is modelled with cluster and virtualisation awareness, which is what you need when the workload is running on a partner’s shared servers under the Flexible Virtualisation Benefit rather than on hardware you can point at.
For help with Microsoft licensing or any other software asset management challenge, get in touch.
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