Study: Unchecked Software Piracy Could Cost Nations Hundreds of Billions Of Dollars

Cutting piracy by 10% over four years would generate 2.4 million new IT jobs, a new IDC study says.

InformationWeek Staff, Contributor

December 8, 2005

2 Min Read

Without a crackdown on global software piracy, countries stand to lose hundreds of billions of dollars in economic growth and tax revenues and millions of new jobs, a study released Thursday showed.

Cutting piracy by 10 percent over four years would generate 2.4 million new jobs in information technology, boost economic growth by $400 billion and increase tax revenues worldwide by $67 billion, according to research conducted by International Data Corp. and released by the Business Software Alliance at a Washington, D.C., news conference.

Each percentage point shaved off piracy, which accounts for 35 percent of software sold internationally, would reap $40 billion in economic benefits by jumpstarting growth in the world's IT sectors, the study showed. A 10 percent reduction in piracy would increase the projected growth rate of the IT industry to 45 percent by 2009. Current estimates with no change in piracy peg the growth rate at 33 percent.

The biggest type of piracy, which is the unauthorized use of software, occurs within businesses and governments, Robert Holleyman, president and chief executive of the BSA, said. Many organizations copy and distribute software internally to avoid licensing fees.

The study makes the case that paying to use software would actually benefit countries more than stealing it.

The United States, which has the world's lowest software piracy rate, stands to gain the most in a global reduction, potentially boosting its economy by $125 billion, the study found. A 10 percent cut in global piracy would increase by an equal amount projected growth in the U.S. IT sector, which is currently expected to increase by nearly a third by 2009.

Countries with the highest piracy rates would also benefit greatly. China could create 2.6 million new IT jobs in four years, which are as many as the United States has been able to create in 30 years of IT leadership, the BSA said. Russia, which has the fifth highest software piracy rate in the world at 87 percent, could triple the size of its IT industry to $30 billion in four years from $9.2 billion today.

The BSA-commissioned study assessed the economic impact of tightening and enforcing intellectual property laws in 70 countries. With 1.1 million businesses worldwide, the IT industry contributes nearly $1.7 trillion a year to the global economy.

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