Studies put monetary value on software piracy

Studies conducted by the Business Software Alliance and International Data Corporation claim the government of India lost taxes of up to $866 Million due to piracy software in 2009 while close to $2.7 Billion worth of software was pirated in the country in 2010.

Software piracy is a problem for software companies globally. Microsoft CEO Steve Ballmer has talked about the impact of piracy on several forums. Back in 2010, Steve Ballmer had praised India's IP protection efforts. Global organization, Business Software Alliance (BSA) has been working towards increasing awareness about piracy and has released studies in partnership with the International Data Corporation (IDC) on how piracy is affecting the economy.

Two of their latest studies, Value of PC Software Theft in India Totals US$2.7 billion in 2010 (PDF link) and Software Piracy in India: Costing Millions to State Exchequer in Tax Losses (Press release) have put Dollar value to software piracy in India during 2009 and 2010. Some of the key highlights of the studies are:

  • Users purchasing one copy and installing it on multiple PCs is one the most common ways that people indulge in piracy.
  • Pirated packaged software in 2009 - 65%, dropped to 64% in 2010.
  • In 2009, piracy cost the government $866 Million in direct ($313 Million) and indirect taxes ($553 Million). While the study might be legit, the whole indirect tax (media, paper licenses and related services) part should be taken with a pinch of salt.
  • Commercial value of unlicensed software installed - $2.27 Billion in 2009 and $2.7 Billion in 2010.

In an earlier report by Gartner, they said India saw a 6% growth in PC sales (desktop and mobile) during Q1 2011 with nearly 2.6 Million units sold between January and March 2011. According to the BSA-IDC study, emerging economies contribute to 2.5 times that of developed countries towards piracy and this is attributed to the strong PC sales in these regions. The reports mention global losses due to unlicensed software was close to $59 Billion in 2010.

The numbers are attention grabbing and interesting. While piracy is a threat, how the government chooses to implement measure to curb it, is as important. The price conscious user in India isn't one to pay a lot of thought to after-sales support (which is the most cited reason to opt for licensed software) if he can save himself considerable money. Reports of government officials using piracy as a way of extorting money aren't less heard of in the country. The government should work with the private sector and find ways to reduce taxes on software sales which would allow the private companies to sell at an affordable price. After-sales support is a huge industry and has significant contributions towards employment and income, it would be beneficial for the country if ways to improve the software supply chain were developed.


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