Pirated software may lead to $35-mn export loss

IDC study says non-compliance could put to risk nearly $790 bn worth of exports in 2014 across six countries of India, China, Brazil, Mexico, Turkey and Thailand

A mid-sized manufacturing company in India could lose as much as $35 million (Rs 210 crore) in export revenue if it is using pirated (unlicensed) softwares as many states in the US look at implementing the Law Against Unfair Competition, research firm IDC said on Thursday.

Under the regulation, which has been implemented in Louisiana and Washington, all manufacturers whose products are sold in the US must achieve full legal compliance of their IT (including use of legal software). Failing to do so, they risk liability and lost sales opportunity.

“We conducted the study across six countries, including India and China. While the good news is that India has better compliance rates than China, Indian companies still face a huge risk, both monetary and of reputation with use of illegal software,” IDC vice-president and general manager, South Asia, Jaideep Mehta said.

Across six countries of India, China, Brazil, Mexico, Turkey and Thailand, non-compliance could put to risk as much as $790 billion worth of exports in 2014. Also, the report estimates that 10 percentage point reduction in usage of pirated software in the manufacturing sector can lead to generation of $1.6 billion in revenue (new revenue and taxes for the government) as well as creation of 15,000 new jobs over the next four years.

“Respondents in India and Brazil rated loss of reputation higher than financial loss, unlike China. Indian companies can compete better, especially when such regulations kick in, if they have legal software in use,” he said.

Mehta added that benefits of using licensed software are many.

"It will help generate $700 million revenue in IT industry for domestic companies and adding $900 million revenue to other industries. It will add $230 million to the local tax base in four years," he said.

"While there are existing laws to prevent the use of pirated software and to protect IP, the time has come to drive strict implementation. Failure on this front would mean not just a negative impact on the manufacturing segment but also on the economy, job opportunities and national reputation," Mehta added.