Posts Tagged ‘BSA economic impact figures grossly exaggerated’

BSA economic impact figures grossly exaggerated, says law firm

Scott & Scott, LLP takes issue with economic impact conclusions of the BSA-IDC Global Software Piracy Study. Robert J. Scott, Managing Partner, says: "The economic impact on IT service firms is grossly exaggerated both in revenue and employment."

Dallas, Texas (PRWEB) June 1, 2009 — The Business Software Alliance (BSA) revenue numbers reported in their Sixth Annual BSA-IDC Global Software Piracy Study have been widely criticized and with good reason. Dallas-based software audit defense firm, Scott & Scott, LLP also takes issue with the economic impact conclusions drawn and could not find support in either the current or a 2008 Study by IDC. Robert J. Scott, Managing Partner, says: "The economic impact on IT service firms is grossly exaggerated both in revenue and employment."

The BSA-IDC's dollar and employment loss figures are based on an assumption that 100% of pirated software represents a direct loss of revenue to the software firms, and to IT employment in local service, support and distribution firms. There is no evidence that every pirated software would be replaced by a purchase of the legitimate version at full retail.

Scott could not find documented proof of the study's conclusion that local IT service and distribution firms lose $3-$4 of revenues for every $1 of PC software sold and that it costs less to support legal software than unauthorized software. He asks: "What costs
are being measured and how much is IT services?"

An IDC study, released in 2008, predicted that lowering software piracy by 10 points over 4 years would create 600,000 additional jobs worldwide….and generate $24 billion in higher government revenues. Although the current report says "that projection has been confirmed by actual experience in China and Russia", and claims that "since 2003, China added 220,000 IT jobs and Russia added 9,000 of which IDC attributes to lower PC software piracy", no reference as to how IDC arrived at these numbers was found.

Scott says: "IDC's report contains no analysis regarding the effect of unlicensed software on IT services. It seems to me that a high percentage of currently unlicensed software would not be replaced at market price and reducing the proliferation of unlicensed software would actually have the opposite effect of that claimed in the study. Fewer, not more, jobs would be created."

In addition, Scott points out that there is another side to the software piracy issue: the side that looks at the interests of millions of honest businesses that routinely purchase legitimate software for the majority of the products that are installed on their networks. Many of these companies, especially in light of the current economic crisis, do not have the financial and human resources to interpret software license agreements and establish very costly compliance initiatives, largely because of the unnecessary complexities of the license agreements created by the software industry.

Software license compliance can cost large enterprises millions of dollars; smaller enterprises often face even greater costs as a percentage of revenue. Complying with the complex and ever-changing license agreements that publishers mandate requires enormous human and financial resources.

Further, business resources dedicated to compliance management are being diverted from potential business development, investments, R&D and innovation opportunities across all industries.

Scott & Scott believes that the Business Software Alliance should do more to lessen the compliance burden on American businesses, as they seek to adhere to complex license agreements and the challenging asset reconciliation process. In doing so, companies will have the resources necessary to invest in revenue generating initiatives, as well as foster innovation that drives their businesses – and the economy.

About us: Scott & Scott, LLP ( and is a leading law and technology services firm dedicated to helping senior executives assess and reduce the legal, financial, and regulatory risks associated with software compliance. Scott & Scott's legal and technology professionals provide software audit defense and software compliance solutions, all protected by attorney-client and work product privileges.