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Rediff.com  » Business » 1% rise in licenced software use can add $1.3b to GDP

1% rise in licenced software use can add $1.3b to GDP

May 21, 2013 18:18 IST

SoftwareA mere one per cent increase in licenced software usage can generate almost $1.3 billion in economic output compared to $554 million from a similar increase in pirated software intake, reveals a study.

"While 1 per cent increase in use of licensed software would generate almost $1.3 billion in national production, a similar increase in pirated software consumption would generate $554 million, meaning properly licenced software would deliver $739 million in additional economic value.

"Therefore, its clear that increasing use of properly licenced software can have a greater impact on the domestic economy than allowing similar growth in the use of pirated software," report said on Tuesday.

The study titled 'Competitive advantage: The economic impact of properly licensed software' analyses data from 95 countries to demonstrate the benefits to their national economies by using fully licenced software.

"The study confirms that increasing use of licenced software corresponds to substantial positive gains in gross domestic product, and that the economic stimulus effect of properly licensed software is significantly greater than that of pirated software," BSA India director Yolynd Lobo said.

The Business Software Alliance, a lobby group representing software product companies, estimates that software makers lost nearly $3 billion or about Rs 16,150 crore (Rs 161.5 billion) in 2011 in India as Indians prefer to illegally copy software rather than pay for it.

Comparable loss in the US was about $9.7 billion and $9 billion in China.

In 2011, the piracy percentage in the country stood at 63 per cent.

The study also finds that each additional dollar invested in properly licensed software has an estimated return on investment of $75 against $19 in case of pirated software.

"Using properly licensed software reduces risk and creates operating efficiencies that go directly to the bottom line for enterprises.

"This study confirms that licensed software is not just good for firms, it is an important driver of economic growth," Lobo said.

Governments, law enforcement, and industry should take every opportunity to reap these potential gains by reducing piracy and promoting use of properly licenced software, she added.

The study, by BSA and business school INSEAD, also found that increasing the use of licenced software by 1 per cent in Asia-Pacific would add $18.7 billion to the regional economy, compared to $6 billion from pirated software, which translates to a difference of $12.7 billion.

Also, increasing licenced software usage globally by 1 per cent would inject an estimated $73 billion into the world economy, compared to $20 billion from pirated software -- a difference of $53 billion.

Every economy included in the study saw greater economic returns from properly licensed software than from pirated software.

On a dollar-for-dollar basis, the return on investment from using properly licensed software is greatest in developing economies -- $437 in extra GDP, on average, the study said.

Each additional dollar invested in licensed software has an average return on investment of $117 in high-income economies and $140 in middle-income economies, it added.

Governments wanting to embrace the economic opportunity presented by licensed software use should establish strong and modern intellectual property laws that protect software and other copyrighted materials on computers, mobile devices, and in the cloud.

They should also step up enforcement of intellectual property rights with dedicated resources and raise public awareness about the risks of software piracy.

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