Fifty per cent of software in India illegal: KPMG

55% respondents say firms lose over 10% of total revenue.

Illegal and unlicensed software installations continue to be a problem and source of revenue loss for software companies worldwide.

In fact, 55 per cent of the executives interviewed estimated their firms' losses at greater than 10 per cent of the total revenue, according to a recent survey by KPMG, the audit, tax and advisory firm. The picture is grim in India too, with 50 per cent of the software in use being pirated.

Overall, 87 per cent of the executives claimed a revenue loss due to unlicensed use.

What's more, 77 per cent of those surveyed agreed with the IDC (International Data Corporation) estimate that 35 per cent of the installed software is unlicensed, leading to an estimated $34 billion in lost revenue to the industry.

"The executives of software companies are struggling to find answers to combat unlicensed software use. Some firms are either not executing compliance programs or require them to be analysed and overhauled. Effective compliance programs help the firms to recoup revenue and maintain strong customer relationships," said Arpinder Singh, executive director, KPMG, India.

According to the study, 64 per cent of software publishing executives said that their companies have a program designed to ensure customer compliance with software license agreements. The remaining said that they have none.

In fact, 20 per cent of the survey takers said that their compliance programs deliver more than five per cent of their software revenue and 30 per cent said they derive between five and 10 per cent of the annual revenue.

Seven per cent of the respondents indicated that these programs actually contribute 10 per cent or more to the top line.

Singh said the picture in India is grim as almost 50 per cent of the software is pirated.

"One of the major problems in India is weak law enforcement and awareness. Though a number of companies have started software compliance programmes, we still need to go a long way. Several leading practices, revealed through our survey, can be applied by software publishers to help recover lost revenues, strengthen software license controls, and improve business relationships with major institutional customers," said Singh.

KPMG surveyed 50 executives from software publishing companies, which collectively represented almost 50 per cent of the industry in revenue terms.

Twenty-eight per cent of the respondents belong to companies earning $5 billion or more through software. Another 62 per cent are a part of companies earning more than $250 million.

KPMG also interviewed executives at six prominent software companies to validate the survey findings and identify software license compliance practices worthy of note.

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PIRACY PANGS

Overall, 87% of the executives claimed revenue loss due to unlicensed use.

77% agree with the IDC estimate that 35% of all software installed is unlicensed, leading to an estimated $34 bn in lost revenue.

64% said their companies have a program designed to ensure customer compliance with software license agreements