Firms lose R3.1bn to pirates

Johannesburg, 12 May 2009

As local companies continue to cut corners and buy pirated software as a way of cutting costs, businesses lost R3.1 billion last year, says the Business Software Alliance (BSA).

According to the global PC software piracy study, piracy of software on personal computers (PC) in SA increased from 34% to 35%, and industry losses due to software piracy rose to R3.1 billion in 2008.The study also revealed that this is the first increase experienced since 2004, when rates peaked at 37%.

"This report demonstrates that we have more work to do in SA to further reduce software piracy. In these uncertain economic times, it is vital that companies do not skip corners and use unlicensed software, as this would increase the detrimental impact on those businesses, consumers, as well as the local and global economy," said Alastair de Wet, SA BSA committee chair.

The study, which was conducted by research firm IDC, surveyed businesses and found that half of the 110 countries studied experienced decreases in software piracy, while 15% experienced increases. According to the survey, this is an indication of the impact of the global economic situation.

"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 business use of software asset management programs to lower IT costs," says John Gantz, chief research officer at IDC.

Job losses

The BSA says it`s not just business revenue that is affected by software piracy. An IDC study released in January 2008 found that reducing software piracy could generate new jobs, substantial economic growth and increase tax revenue to support local programmes and services.

"Reducing the software piracy rate in SA by 10 percentage points would have a `multiplier effect` and increase those economic benefits, generating 1 200 additional jobs, R480 million in tax revenue and R6 billion in spending in the local IT sector over the next four years," says the BSA.

In combating piracy of all packaged software that run on personal computers, including desktops, laptops and ultra-portables, advocacy is key, says the BSA. Increasing education and awareness on the risks of using unlicensed software; along with government involvement, would see the public sector lead by example in the fight against pirated software, says the BSA.

Key findings

The study also found that because the worldwide PC market grew fastest in high-piracy countries, the worldwide piracy rate increased by three percentage points, to 41%, in 2008.

In the Middle East and Africa region, the highest-piracy countries were Zimbabwe, with 92%, Yemen, with 89%, and Libya, with 87%. Among the lowest-piracy countries was Israel, with 32%, SA, with 35%, and the UAE, with 36%, the study revealed. Lowering global piracy by just one point a year would add $20 billion in stimulus to the IT industry.

Spreading Internet access will increase the supply of pirated software, the study revealed. Over the next five years, 460 million people in emerging countries will come online - the growth will be highest among consumers and small businesses, which tend to have higher rates of piracy than businesses and government agencies, the study reported.