This depends on a lot of factors, but this estimate does seem high. It's hard to say what processes other companies may do but here are my thoughts.
I would estimate for one of our hosted customers there may be 1-2 hours work involved in a minor 2.x upgrade. This could increased slightly if I'm working outside of our own hosting environment, or if I have to backup data over a slow connection (although you may expect to only be charged for human effort and not the time taken for data transfers to occur).
To migrate and upgrade a new client from their old hosting environment to ours e.g. a 1.9 site all the way to 2.9 I would allow between half a day and a day, so 4-8 hours. If your chosen IT providers don't have a scooby-do about Moodle you can extend these time scales to account for them fumbling and making errors.
You should ask them to break up the estimate into specific operations, e.g.
- Full backup of current data. The time depends on amount of data involved.
- Are they creating a test environment for the upgrade first? If so will take time bring together properly.
- Deploying the new codebase and all plugins required... An hour perhaps? Add more time if there are local modifications to merge.
- Performing the upgrade, depends of the versions you are moving from and to, maybe taking another hour or so.
- Testing the upgrade... some time depending on how you want to be.
This said, some HE clients we support may easily take 30 hours of work for their annual upgrades, involving UAT environments, multiple third party plugins, local modifications, archive snapshots, the coordination of several departments and services at the institution and 100's of GB of data being moved around. Most of the time is planning and testing and the actual 'upgrade' typically takes a morning.
Where I work this is all rather moot though, as we don't charge for upgrades as we see them as a necessary part of sustainable Moodle hosting