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Software Piracy Costs IT Services Providers $200 Billion in 2008

Worldwide software piracy climbed to a record high in 2008 to $50.2 billion in actual losses for illegally distributed and used applications, and cost another $150 billion to $200 billion in value-add technology services, according to a new report by the Business Software Alliance (BSA) and technology research firm IDC. In their sixth annual report, […]

Written By: Lawrence Walsh

May 12, 2009

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Worldwide software piracy climbed to a record high in 2008 to $50.2 billion
in actual losses for illegally distributed and used applications, and cost
another $150 billion to $200 billion in value-add technology services,
according to a new report by the Business Software Alliance (BSA) and
technology research firm IDC.

In their sixth annual report, the two groups report that pirated software,
as a percentage of total software in use, rose from 38 percent in 2007 to 41
percent in 2008, mostly due to the increasing PC sales in countries such as China
and India that
are prone to high piracy rates.

The United States
continues to have the lowest software piracy rate in the world, with just 20
percent of the computer applications in use being pirated. However, BSA and IDC
report that the total value of pirated software in the United
States is $9.1 billion, the highest in the
world.

The total worldwide value of pirated software topped the $50 billion mark
for the first time since BSA and IDC started
measuring the piracy losses in 2003. By comparison, the two groups say
legitimate software sales account for $88 billion in global sales and personal
computer sales top $244 billion annually.

Worse news for solution providers and value-added resellers is the impact of
software piracy on their direct and indirect sales. BSA and IDC
report that for every dollar lost to software piracy, another $3 to $4 in
value-added services and support is also lost. IDC
estimates that a 10 percent drop in software piracy would lead to the creation
of more than 600,000 new technology support and services jobs worldwide.

“The bad news is that PC software piracy remains so prevalent in the United
States and all over the world,” says Robert
Holleyman, president and CEO of the Business
Software Alliance. “It undermines local IT service firms, gives illegal
software users an unfair advantage in business, and spreads security risks. We
should not and cannot tolerate a $9 billion hit on the software industry at a
time of economic stress.”

The impact on government coffers is equally significant in the form of sales
tax revenue. The report states that a 10 percent drop in software piracy would
generate more than $24 billion in sales taxes for governments around the world.

A contributing factor to the increased value and volume of pirated
software is the global economic downturn. The decreasing buying power of
consumers and businesses is causing many computer users to seek black market or
pirated applications.

“Reduced buying power is only one of many factors affecting software
piracy,” says John Gantz, chief research officer at IDC.
“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.”

Software Piracy Costs IT Services Providers $200 Billion in 2008

Lawrence Walsh

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