PC Software Piracy Level Down to 68% in India

Monetary Value of Software Piracy Losses Increases to US$ 2.7 billion

The personal computer (PC) software piracy level in India registered 68 percent in 2008, a one point drop from 69% in 2007. However dollar losses caused by software piracy continued to increase, rising to US$2.7 billion in 2008 compared to losses of US$2 billion in 2007.

These are among the findings of the Sixth Annual BSA-IDC Global Software Piracy Study released by the Business Software Alliance (BSA). The study was conducted by IDC, the information technology (IT) industry’s leading global market research and forecasting firm.

In 2008, the rate of PC software piracy dropped in slightly more than half (57) of the 110 countries studied, remained the same in nearly one third (36), and rose in just 16. However, the worldwide PC software piracy rate rose for the second year in a row, from 38 percent to 41 percent, mainly because PC shipments grew fastest in high-piracy countries such as China and India, overwhelming progress in these and other countries.

In another sign of the scale of the problem, the monetary value of “losses” to the software industry from PC software piracy broke the $50 billion level for the first time. Worldwide losses grew by 11 percent to $53 billion in non-adjusted dollars, although half of that growth was the result of the falling US dollar. Excluding the effect of exchange rates, losses grew by 5 percent to $50.2 billion.

Negative Impacts Go Far Beyond Software Industry

Software piracy affects much more than just the global software industry. For example, for every $1 of software sold in a country, there is another $3 to $4 of revenues for local IT service and distribution firms. A 2008 IDC study predicted that lowering PC software piracy by 10 points over four years would create 600,000 additional new jobs worldwide. That projection has been confirmed by actual experience in China and Russia, the new study says.

Software piracy also lowers tax revenues at a time of increased pressure on governments to provide essential services. According to the 2008 study noted above, reducing piracy by 10 points would generate $24 billion in higher government revenues without a tax increase.

According to an economic impact study of software piracy conducted and published by IDC last year, in India, reducing software piracy by ten percentage points over a four year period could generate an additional 43,000 new jobs, US$3.1 billion in economic growth, and US$200 million in tax revenues. There was further good news for local vendors, where the study also predicted an additional US$2.7 billion in revenues to local vendors alone.

Mr. Keshav Dhakad, Chair of the BSA India Committee said, “Software piracy levels in India are witnessing a regular decline, and this can be attributed to the various intellectual property (IP) awareness efforts being driven by governments, industry and the judiciary. However, as the size of the Indian PC market grows, the impact of software piracy on the local economy continues to increase, with 2008 seeing a 35% increase in losses amounting to $2.7 billion. This is a direct threat to the competitiveness of the Indian IT industry, the country’s ability to attract new investments, innovation and the creation of job opportunities. Though the Indian domestic software industry has the potential to realize tremendous growth, it continues to be challenged by high software piracy rates. We are hopeful that the new government, together with the state governments, will take positive steps in driving anti-piracy initiatives, such as the formation of a national anti-piracy taskforce, the setting up of special IP courts, the promotion of IP rights and the training of enforcement officials,” added Mr Dhakad.

Mr. Som Mittal, President, NASSCOM, said, “It is encouraging to see a gradual decline in the software piracy rate in India, as reflected in the 6th BSA – IDC Global Software Piracy study, where the rate fell 6 percentage points in 5 years. Although, software piracy in India should be brought down at a faster pace, a slow and gradual decline is also indicative of the positive efforts taken by the government, industry and judiciary in helping raise awareness and supporting the fight against software piracy”. “NASSCOM realizes that software piracy is a serious threat to the growing Indian IT industry, eroding the potential for job creation, economic growth and increasingly important for domestic product innovation. Indian IT industry is moving towards product development and thus protection of IPR and reduction of software piracy should be taken seriously by all stakeholders. The findings of this study published by BSA – IDC reinforce the need for urgent collaborative effort between the government and industry to tackle software piracy in India through stronger policy, awareness and enforcement initiatives to help enhance India’s economic and IT competitiveness.”

Security Threats Due to Usage of Pirated Software

Software piracy also increases the risk of cyber crime and security problems. For example, the recent global spread of the Conficker virus has been attributed in part to the lack of automatic security updates for unlicensed software. In a 2006 study, IDC found that 29 percent of Web sites and 61 percent of peer-to-peer sites offering pirated software tried to infect test computers with “Trojans,” spyware, keyloggers, and other tools of identity theft.

As per security leader Symantec, they have witnessed an unprecedented explosion of malware over the last 5-7 years. In all years cumulative from 2002 through 2007, Symantec created a total of 800,000 unique malware signatures, but in 2008 alone, the security expert created 1,800,000 unique signatures – a 239% increase from 2007 (White Paper – Web Based Attacks, February 2009, Symantec).

Today, producing malware and malicious codes has become an industry within the organized criminal syndicates and in this atmosphere, it seems logical to infer that the risks and dangers faced by users of pirated software are only increasing by the day.

Impact of Global Recession Is Mixed

The global economic recession is having a mixed impact on software piracy, the study says. Victor Lim, Vice President, Asia/Pacific Consulting Operations at IDC, notes that consumers with reduced spending power may hold on to computers longer, which would tend to increase piracy because older computers are more likely to have unlicensed software loaded on them. However, pocketbook pressures are spurring sales of inexpensive “netbooks,” which tend to come with legitimate pre-loaded software; and spurring businesses to implement software asset management (SAM) programs to increase efficiencies and lower IT costs.

“Reduced buying power is only one of many factors affecting software piracy,” Lim says. “The economic crisis will have an impact – part of it negative, part of it positive – but it may not become fully apparent until the 2009 figures come in.”

The BSA-IDC Global Software Piracy Study covers piracy of all packaged software that runs on personal computers, including desktops, laptops, and ultra-portables. The study does not include other types of software such as server- or mainframe-based software.

For more details or a copy of the complete study, visit www.bsa.org/globalstudy.

Business Software Alliance (www.bsa.org) is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world’s software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include Adobe, Agilent Technologies, Altium, Apple, Aquafold, Autodesk, Bentley Systems, CA, Cadence Design Systems, Cisco Systems, Corel, CyberLink, Dassault Systèmes SolidWorks Corporation, Dell, Embarcadero, Frontline PCB Solutions – An Orbotech Valor Company, HP, IBM, Intel, Intuit, McAfee, Microsoft, Mindjet, Minitab, NedGraphics, PTC, Quark, Quest Software, Rosetta Stone, SAP, Scalable Software, Siemens, Sybase, Symantec, Synopsys, Tekla and The MathWorks.

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 45 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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