The India office at Yahoo! Inc. (NASDAQ:YHOO) has started to transfer employees to Microsoft. The Yahoo! employees at Microsoft will work on search and search advertising as part of a deal that the two companies made. Microsoft Bing will be used as the search engine to power Yahoo! searches and Yahoo! will sell premium ads for both companies. Over 200 engineers at Yahoo! will move to an Online Services Division development center that Microsoft created in Bangalore, India. The new center will be part of Microsoft’s overall R&D organization.
Yahoo! has about 2,000 engineers in Bangalore and they plan to hire another 300 this quarter for cloud computing and mobile Internet initiatives. Yahoo! will continue to compete with Microsoft on search and is developing new technologies that complements their existing services. [PCWorld]