Under the partnership, Ola will use Microsoft cloud, artificial intelligence (AI) and productivity tools to enhance rider experience as well as for predictive maintenance of the cars.
The offerings will also be taken by both the companies to car manufacturers globally for integration with vehicle systems.
"There are synergies... The two companies working together can accelerate the future of mobility, especially in India and beyond," Ola co-founder and CEO, Bhavish Aggarwal said at the India Today Conclave Next 2017.
Microsoft will be a preferred cloud provider and its Azure cloud platform will be used to power Ola's existing connected car platform - Ola Play.
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Ola Play will leverage Microsoft's AI and IoT to enhance driver experiences with telematics and navigation guidance, and provide auto manufacturers with custom digital experiences for their customers.
Ola Play customers will be able to use productivity tools like Office 365 and Skype for business during their rides.
"Todays car is quickly becoming the ultimate computing device and together with Ola, we are focused on providing more intelligent, connected and productive experiences to our customers," said Nadella, who is currently on a two-day visit to India.