At a Wednesday press conference with Microsoft CEO Steve Ballmer, New York City Mayor Michael R. Bloomberg said that Microsoft’s Internet-based cloud technology will be used by dozens of government agencies for consolidating computer resources, enhancing information-sharing and reducing costs.

Bloomberg said that the government contract for Microsoft’s cloud-based software will help the city save as much as $50 million in the coming five-year period of the agreement. The Mayor further added that the deal with Microsoft will result in the scrapping of a number of individual license agreements covering servers, software and data storage.

With the cancellation of the license agreements, the city, which has a $63 billion budget this year, will rely largely on Microsoft’s cloud computing, which will give nearly 100,000 employees access to a single source of constantly updated information.

As per the terms of the deal, 30,000 New York City employees will use Microsoft’s Business Productivity Online Suite that includes email and a collaboration product called SharePoint. From next year, the users will switch over to Microsoft’s Tuesday-announced Office 365 product which also includes the company’s collection of productivity applications like Word and Excel.

The New York City contract, which is worth almost $20 million per year, will include upgrades to Windows 7, some server software and access to Azure - Microsoft’s platform for cloud hosting and programming. Furthermore, the deal will also help New York trim its 50 data centers down to only a single one.