Emerging markets have the greatest potential returns from increasing use of licensed software
Washington, DC — May 21, 2013 —
A new study from BSA | The Software Alliance and INSEAD, one of the world’s leading business schools, finds that increasing the amount of properly licensed software in use globally by 1 percent would add an estimated $73 billion to the world economy, compared to $20 billion from pirated software — meaning there is a $53 billion advantage associated with using licensed software. The study also finds the greatest potential for economic gains are in emerging markets where piracy is most common today.
Competitive Advantage: The Economic Impact of Properly Licensed Software is a groundbreaking analysis that draws on data from 95 countries to demonstrate the benefits to national economies of using fully licensed software. The study confirms that increasing use of licensed software corresponds to substantial positive gains in gross domestic product (GDP), and that the economic stimulus effect of properly licensed software is significantly greater than that of pirated software.
“Properly licensed software comes with value-added services that improve operational efficiency for businesses and boost output for entire economies,” said Jodie Kelley, General Counsel and Senior Vice President, Anti-Piracy for BSA. “For governments looking at ways to stimulate growth, this analysis shows that properly licensed software offers a huge return on investment.”
The study finds that every country around the world can derive greater economic value from properly licensed software than from pirated software. The gains from a 1 percent increase in licensed software use exceed the impact of a similar increase in pirated software use by a wide margin — ranging from $15.1 billion in additional economic value in the US to $5.9 billion in Japan to $739 million in India.
On a dollar-for-dollar basis, the return on investment (ROI) for national economies from properly licensed software is greatest in developing countries — $437 in extra GDP, on average, compared to $35 for every dollar’s worth of pirated software put into the market. But countries across all income levels benefit: each additional dollar invested in licensed software has an average ROI of $117 in high-income countries compared to $42 from pirated software, and $140 in middle-income countries compared to $28 from pirated software.
“Previous studies have shown that value-added services delivered with properly licensed software help firms to reduce costs and increase investment. This report goes one step further to ascertain the impact of software use on national production,” said Eduardo Rodriguez-Montemayor, senior research fellow at INSEAD eLab. “The results make it clear that licensed software is beneficial for business and national economies — and that licensed software has a greater economic impact than pirated software across all countries included in the study.”
Governments and enterprises wanting to embrace the economic opportunity presented by licensed software use should take action in the following areas:
- Establish strong and modern IP laws that protect software and other copyrighted materials on PCs, mobile devices, and in the cloud.
- Step up IPR enforcement with dedicated resources.
- Raise public awareness about the risks of software piracy.
- Lead by example by using only fully licensed software and implementing software asset management programs.
A full copy of the study: Competitive Advantage: The Economic Impact of Properly Licensed Software is available for download on BSA’s website: www.bsa.org/softwarevalue.
About INSEAD eLab
As one of the world’s leading and largest graduate business schools, INSEAD brings together people, cultures and ideas from around the world to change lives and transform organizations. eLab is INSEAD’s center of excellence in the global knowledge economy. A key objective of INSEAD eLab is to strengthen links across academia, business leaders and policymakers by: drawing on a variety of global resources to develop research insights that are academically rigorous and relevant to private and public sector leaders.
Information on INSEAD eLab, including other research reports, can be found at insead.edu/elab.