Microsoft 365 license waste: the seats your India bill is hiding

By Karthik Iyer, Sirius Star. Cloud and network practice.

Anand runs finance at a 240-person engineering firm in Pune. He called me with a clean question. Our Microsoft 365 bill went up again, which plan should we drop everyone to. That is already the wrong question, and the reframe is the whole job.

You do not fix a software bill by choosing a cheaper tier for everybody. You fix it by finding the seats you are paying for and nobody is using, because that is where the money actually sits. I have run this audit for 17+ years, and it almost always ends the same way. The plan was never the problem. The discipline behind the plan was missing.

Anand’s bill, and the question under it

Anand is not wrong to be annoyed. Same headcount, bigger bill, so somewhere someone is either overspending or getting sold things the firm does not need. When a CFO says the M365 bill feels high, he usually means it feels like it grew on its own. That is a different complaint, and it has a better fix than a downgrade.

I asked him for one thing before we argued about tiers. The active users report from the admin centre, with the last sign-in date next to every licence. He had never pulled it. Most finance teams have not, because it lives in a portal they do not open. If you want the CFO view of this, we wrote it up here: what a finance head should actually watch in the M365 renewal.

Where the Microsoft 365 license waste actually hid

The report came back and it read like an archaeology dig. Nobody deletes a licence they did not buy, so the estate had quietly kept every account it ever created.

Twenty-two accounts had not signed in for over 90 days. Most belonged to people who had left. Each one still held a full E3 licence at around Rs 2,995 a user a month, and each one was still a live mailbox nobody was watching. A dormant licensed account is not only a wasted seat. It is an open door, the kind the DPDP Act’s Rs 250 crore penalty gets written about later.

Sixty shop-floor and field staff sat on E3. They open email on a shared kiosk and little else. E3 hands them Teams, SharePoint, Purview and a desktop Office suite they never install. They needed Exchange Online at around Rs 335 a user, or a frontline plan, not the full enterprise tier at 2,995.

Then a Copilot pilot from last Diwali. Fifteen add-on seats bought in a burst of enthusiasm. Three people still used it. The other twelve were paying every month for a feature they had forgotten they owned.

Where my first draft was wrong

My first cut was aggressive. Move the whole company off E3, drop everyone to Business Standard, save fast, look like a hero on the spreadsheet. Two accounts stopped that plan cold.

The compliance officer and one legal lead genuinely needed E5. Not for status, for the tools. eDiscovery and the data-loss controls a regulated firm has to produce when an auditor asks. Cutting them to Standard would have saved a few thousand rupees and quietly removed the one control that keeps an audit survivable. If you are weighing those two enterprise tiers, this walks through which role actually needs E3 and which needs E5.

Right-sizing is a per-role exercise, not a flat downgrade. Cut by usage, then protect the two or three roles where the expensive tier is doing real work. A right-sizing, not a cost cut.

The math, once we sorted it by role

The table only earns its place after you have read the usage report, not before. Here is what Anand’s estate looked like once every licence was matched to what the person actually opens.

*India list prices, per user per month, billed annually, GST extra, per Microsoft’s enterprise and business plan pages. Microsoft revises these without much notice.

The dormant seats alone were about Rs 66,000 a month, close to Rs 8 lakh a year, for accounts of people who no longer worked there. The mis-tiered sixty were leaking near Rs 1.6 lakh a month. Add the Copilot dozen and the number Anand had been quietly paying was around Rs 25 lakh a year on a bill of about Rs 90 lakh. That is a senior engineer, or two, sitting inside an invoice finance approves without reading. Gartner has put this kind of overspend at a quarter of the software bill for firms that never coordinate their licences. Anand’s estate landed almost exactly there.

What I told Anand

Stop shopping for a cheaper plan. Start running the report every quarter. The tier menu was fine. The habit of reading it was the missing part.

We deprovisioned the 22 leavers, moved the sixty to Exchange plans, killed the twelve idle Copilot seats, and left E3 and E5 exactly where they earned their keep. The bill dropped by roughly a quarter and not one person lost a tool they were using. We have seen a single quarterly usage review save more than any renewal negotiation, because you cannot discount your way out of paying for people who left. If you want the full tier-by-tier price list, it is here: the Microsoft 365 India plan and price guide. And if you are still running perpetual Office somewhere in the estate, that is its own cleanup: moving off perpetual Office without losing files.

If you are running this audit yourself

You do not need a consultant for the first pass. You need one afternoon and a willingness to read the usage honestly.

• Pull the active users report first. Sign-in date beside every licence. If an account has been dark for 90 days, it is a leaver or a seat you can reclaim.
• Match the tier to what the person opens. Someone who touches only email does not need the enterprise suite. Paying 2,995 for a 335 job is the most common leak we find.
• Treat dormant accounts as a security item. A live mailbox with no owner is a DPDP problem before it is a billing one. Tie licence removal to your device offboarding so both happen the day someone leaves.
• Audit your add-ons on their own. Copilot and Power BI Pro get bought in pilots and forgotten. Check the usage before the renewal, not after it.
• Protect the roles that need E5. Compliance, legal, anyone who runs eDiscovery. Right-sizing means cutting waste, not the controls an auditor will ask for.

Frequently asked questions

What is the most common Microsoft 365 license waste in India?
Dormant accounts and mis-tiered users. Licences of people who left keep billing, and staff who only use email often sit on a full enterprise plan. Between them they usually account for most of the waste we find in a mid-size estate.

How do I find unused Microsoft 365 licences?
Pull the active users report in the Microsoft 365 admin centre and read the last sign-in date next to each licence. Anything dark for 90 days is a leaver or a reclaimable seat. It takes one afternoon and no extra tool.

Should I just move everyone to a cheaper plan to save money?
No. A flat downgrade saves a little and can remove controls that compliance and legal roles genuinely need. Right-size by role instead. Cut the waste and keep E3 or E5 where the tier is doing real work.

Is a dormant Microsoft 365 account a security risk?
Yes. A licensed account with no active owner is a live mailbox nobody is watching, which is the kind of gap the DPDP Act expects reasonable security to close. Deprovision leavers the day they go, not at the next renewal.

Still deciding whether your M365 bill is high or just untidy

If your Microsoft 365 bill keeps climbing and you cannot yet say whether it is too high or just never cleaned up, that is the hour worth spending. We will pull your usage report, sort every licence by role, and show you which seats to reclaim and which tiers to protect. Free, no card, no sales call. 200-plus Indian businesses trust Sirius Star, delivery pan-India from Vashi, Navi Mumbai, reply within 24 working hours. Get a free Microsoft 365 licence review. WhatsApp +91 91375 93228 or care@siriusstar.in, 10 to 7 IST if you would rather just ask.

P.S. Karthik here. We sell and service Microsoft 365, so read this knowing that. We still make money right-sizing you down, because a clean estate renews for years and a padded one leaves the first time someone finally reads the invoice. Bas, pull the report. The bill going up sometimes means you hired. Often it just means twelve Copilot seats have been asleep since Diwali.