$ 0.8 Bn Saved Through Using Pirated Software Regresses to a $35 Bn Loss in Exports: IDC Study

According to IDC, use of pirated software by a mid-sized Company in India can expose the Company to an export loss of $35 million, while the savings expected from using pirated software is less than a fraction of the expected loss, at $0.84 million. The Law Against Unfair Competition in the United States promotes fair competition and encourages manufacturers to respect property rights in their IT systems. All manufacturers whose products are sold in the United States must achieve full legal compliance of their IT, failing which they risk liability and lost sales opportunities. The law provides a strong incentive for manufacturers to take responsibility for their IT systems and ensure that businesses are able to compete fairly.

What is UCA?

The Unfair Competition Act (UCA) Law states that ‘A business that manufactures a product while using stolen or misappropriated information technology (stolen IT) in its business operations engages in unfair competition when the product is sold in Washington, either separately or as a component of another product, in competition with the product made without use of stolen IT." The law also implies that the US Company selling within the State of Washington is responsible for the suppliers who may be located anywhere in the world. It applies to all manufactured products and to all suppliers from any country, and allows the Government to block the US Company from selling the finished product in the State and compel them to pay damages for what either the Company themselves or their overseas supplier(s) did.

The law has been passed in two States - Louisiana and Washington. The other 36 states are seeking ways to use the traditional powers of their office to address the unfair competition advantage and taking actions under existing Fair Competition Acts. These growing enforcement actions are a logical and welcomed step toward the call made by U.S. officials to curb unfair competition and ensure a level global playing field for suppliers and manufacturers.

IDC's report predicts that a reduction in usage of pirated software in the manufacturing sector by a mere 10% over the next four years will deliver compelling positive outcomes, not just on the manufacturing segment, but also on the IT industry($700million in new revenue) and other related industries($900million in new revenue). Further, over 15000 jobs will also be created.

"Software piracy is expected to have a negative impact on the India's growing manufacturing sector. Both large and small enterprises in this sector will have to ensure IT compliance for continued sectoral growth and positive impact on the economy. The insidious challenge of software piracy in India, is drawing global attention and might affect India's competitive edge," says Jaideep Mehta, ‎Vice President and General Manager - South Asia, IDC.

IDC's report titled The Dramatic Impact "Unfair Competition" Initiatives in the United States Could Have on Emerging Markets investigates the impact of software piracy in six emerging markets including India, China, Brazil, Mexico, Thailand and Turkey. The report further notes that upto $790 billion in exports will be jeopardized across the six markets in 2014. Meanwhile, consumers and businesses in these markets are expected to spend nearly $150 billion for network security processing malicious programs caused by software piracy.

'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,' adds Mehta.