The Strategic Sourceror

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Yo Ho Ho: Reduce Software Piracy - and Save Big Bucks
Thursday, January 31, 2008
The Business Software Alliance has long been on the case of U.S. companies who use, inadvertently or not, unlicensed software for their business operations. Make no mistake, the BSA has aggressively gone after and imposed heavy fines on companies who are caught in the act using pirated software.

It's not hard to catch a software thief -- all it takes is one disgruntled IT employee who knows that the latest batch of Microsoft Office software was . . . ummhh . . . tainted. One dime dropped to the BSA and the manhunt is on.

This week, the BSA is adopting a softer, gentler tone. It's touting a study from International Data Corporation that says reducing software piracy in the United States by just 10 percentage points over the next four years could generate more than 32,000 new jobs, $41 billion in economic growth, and $7 billion in tax revenues above current projections. And it's not just the U.S. While the United States has much to gain from reducing illegal software, high-piracy emerging economies like China, Russia and India could experience even more dramatic, positive impacts, the IDC study suggests.

The study, commissioned by BSA says that the information technology industry is already a major contributor to the American economy. In 2007, the United States spent nearly $458 billion on IT goods and services including computers, peripherals, network equipment, packaged software and IT services. That spending accounted for 3.4 percent of gross domestic product (GDP), supported more than 314,000 IT companies with 2.9 million IT industry employees, and helped generate $485 billion in IT-related taxes.

Yet the IT sector’s contribution to the US economy would be even greater if America’s 21 percent PC software piracy rate could be lowered to 11 percent by 2011, the study said. Such an improvement would add highly skilled jobs to the labor force, support the creation of new companies, lower business risks, and fund government services without a tax increase.
Moreover, reducing software piracy has a "multiplier effect."

According to IDC, for every $1 spent on legitimate packaged software, an additional $1.25 is spent on related services from local vendors such as installing the software, training personnel, and providing maintenance services.

"When countries take steps to reduce software piracy, everyone benefits," said Robert Holleyman, president and CEO of BSA. "With more and better job opportunities, a stronger, more secure business environment, and greater economic contributions from the already robust IT sector, reducing software piracy would deliver tangible benefits for governments and local economies."

The study also reveals big changes in the global IT landscape that could result from piracy reductions in emerging economies.

For example, a 10 percent reduction in China’s 82 percent PC software piracy rate could make that nation’s IT workforce the largest in the world within four years, surpassing the number of IT workers in the United States. The number of IT jobs in China would grow by an additional 355,000 beyond those already projected, bringing the total number of IT jobs in China to almost 3.5 million by 2011. The improvement could increase IT spending growth from 10.3 percent a year to 13.7 percent between 2008 and 2011.

Likewise, a 10 percent cut in Russia’s 80 percent PC software piracy rate could help make the Russian IT sector larger than India’s within four years, putting it among the top three fastest-growing IT markets in the world. By 2011, with reduced software piracy, Russia’s IT sector would be a $33.9 billion industry, compared to $32.2 billion in India without a cut in piracy and $33.7 billion with a cut in piracy. Russia’s IT sector would see annual growth in spending rise from 14.6 percent to 18.2 percent between 2008 and 2011 with a 10 point cut in piracy, with 20.2 percent growth for India and 21.4 percent for Kazakhstan (both with a 10 point piracy reduction).

Appealing to a CEO's better, fairer instincts -- specifically, his or her companies' bottom line, is a new tactic for the BSA. But in a tough economic environment, perhaps this pirate pitch won't fall on deaf ears.

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posted by William Dorn @ 8:13 AM   0 comments
Welcome to the Source One Strategic Sourcing Blog
Thursday, January 3, 2008
Welcome to the brand new blog spot dedicated to Strategic Sourcing current events, thoughts and articles, with a focus on the mid-market.

This blog is sponsored and maintained by Source One. We hope to provide a new forum for conversation that focuses on not just the companies in the Fortune 500 space.

Unlike other blogs, we hope to encourage discussions around the services, issues and economic reasons for Strategic Sourcing and Procurement Outsouring instead of focusing on Spend Management Software Providers alone.

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posted by Strategic Sourceror @ 10:51 AM   0 comments
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