Laurent Signoret, Central and East Europe Anti-Piracy Lead at Microsoft - Piracy down by 2%, turnover up by USD 30 million

(Laurent Signoret)

While the software piracy cost the global industry the record-breaking USD 63.4 billion in 2011, up by 8 percent from one year earlier, the software piracy rate in Serbia dropped 2 percent. The latest research by Business Software Alliance shows that after three years of stagnation, that rate in Serbia fell from 74 to 72% last year, which resulted in EUR 3.5 million worth of direct budget revenues.

The major role was played by the Tax Authority, who took the leadership in promoting the importance of fully legal business and established a special unit for software control. A contribution is also given by some of the most significant IT companies that operate in our country.

In an interview with eKapija, Laurent Signoret, Central and East Europe Anti-Piracy Lead at Microsoft, speaks about the causes of such high piracy rate in Serbia, the things done to reduce that negative trend and the benefits from the software piracy rate reduction.

eKapija: What does this improved rating in piracy rate means for Serbia?

- Decreasing piracy rate is a positive signal for foreign investors that Serbia is an attractive destination and that its government is proactively oriented. Serbia is in the middle of the process of admission to the EU and the WTO, where full implementation of IPR represents one of the preconditions. So we can say that the piracy rate reduction is in line with these processes.

Also, piracy rate is a good indicator of business maturity of the country. It is important not just for big companies and their investments, but also for positive effect on local economy, IT industry growth, start-up business etc. We expect that the export of software from Serbia will grow and that all other indicators will show progress.

eKapija: Is that result good when compared to other countries within the region?

- Serbia had the biggest decrease in the region, -2 percentage points, while Croatia, Bulgaria and Slovenia lowered the piracy rate by 1 percentage point. Other countries withing the CEE region remained on the same level. However, since Serbia has been stagnating over the past 3 years, it means that we are actually catching up with positive trends in the region.

For example, Croatia's and Slovenia's piracy rates are 63% and 47%, respectively, so Serbia has to keep its focus on IPR to remain on track and reach an average rate in the region.

eKapija: What are the expectations for the future period?

We expect a positive trend in this area to continue. That means to have 2-3 points decline per year. Our aspiration is to have 10 points down within the next three-year period.

eKapija: In your opinion, what is the biggest problem of high piracy rate in Serbia and what is the main reason for that?

- There are three different types of piracy, three sources: piracy in distribution channels, piracy in consumer segment, which is actually the same problem as the music and film piracy and is more and more present with wide Internet usage, and piracy in business sector, which is the least acceptable and is in a loop of government and software vendors.

At this moment, software accounts for less than 10% of IT spending, which is the lowest item in the IT cost structure. Software has to be run as any other asset and it is important to realize that investment in sofware is not simply a cost – it is an investment that delivers return (ROI) and helps business to improve productivity. So, beside legal prerequisites that must be met, there are business reasons for investing in appropriate software programs.

eKapija: What is the total annual loss of public revenue in Serbia caused by software piracy?

- Researches shows that a 10% decrease in the piracy rate would mean USD 29 million worth of tax income. This money is going back to public budget and is earmarked for public spending, it is fueling the economy.

Serbia had a USD 4.7 million increase in VAT income in 2011, and in the first 3 months of 2012, the progress continues. Other indicators are also very positive, so it is realistic to expect that this trend will continue in the years to come.

eKapija: Software legalization does not mean only to respect intellectual property, but it creates new jobs as well. How many jobs would be created with a 2% decrease in the software piracy rate?

- Despite of crisis, IT industry in Serbia is still active and creating jobs. It is estimated that a 10% decrease in the piracy rate would result in the creation of 12,000 jobs - not any jobs, but well-paid jobs for highly educated people, which would keep Serbian young talents in the country...

A 2% decrease resulted in a 3% increase in the total number of employees in the IT sector and led to a 1.5% increase in software trade, a 1.7% increase in IT services, a USD 30 million increase in the 2012 turnover of the IT industry...

Basically, development of the IT industry has a multiple effect - it is a driver of the economy growth of any progressively oriented country. As one of the biggest IT company in Serbia, we are taking an active role in supporting the development of the IT industry in Serbia. We are strengthening our partner network, which includes 900 domestic IT companies. This network delivers 60% of total values in income, added value, number of employees and capital.

eKapija: What does Microsoft do to reduce the piracy rate in Serbia and what measures will result in a further decrease?

- First, we control sales channels to minimize this source of piracy. It is important that customers, when they contact a vendor or go to a store to buy a computer, get a proper information and be aware of potential risks of illegal software and benefits of the original one... So, we educate the market about risks and benefits and work with our Microsoft Partner Network to support this process. Second, we are trying to make software available and affordable to students and enterpreneurs and to encourage and support them to buy the original software for their work. And third, we cooperate with the government in this area, with a common aim to secure the progress in IPR, as this is an inevitable part of Serbia's economy development.

eKapija: What is the role of the government and does the government help Microsoft in the fight against piracy? What are the institutions you work with and are you satisfied with this cooperation?

- Piracy is not a Microsoft issue, it is social issue, issue of the country and its economy. It affects a lot of industries, not just the sofware industry...

As I said, the tax authority has made a significant step forward and they have good results of their efforts so far. Beside them, a lot of government bodies have been involved in this topic and it is important to have all institutions focused on the same goal – to secure progress and support creating an end-to-end process. At this moment, we believe that the No.1 priority is to have a stronger enforcement of IPR law.

eKapija: A research by Microsoft (Mistery Shopper) in Serbia has showed that IT companies selling hardware and software are one of the sources of piracy. How do you comment this?

- We are doing the research dubbed "Mistery Shopper" on a regular basis. This is one of the ways to control our sales channels and to deal with this source of piracy. Our aim is to protect our customers and to make sure that they get a proper information about the benefits of original software and be aware of potential risks of a pirated version.

eKapija: What are the benefits of using legal software? How would you explain to citizens in Serbia why they should buy legal programs?

- In the consumer segment, we have developed a study that shows that illegal software carry 30-40 more viruses, spams etc. So the first reason for consumers is security -– you may lose your data, credit card number etc., and that is the main threat. The second reason is quality, which is guaranteed by Microsoft and always on the highesst possible level. The third one is the relationship with Microsoft, in terms of updates, protection etc. Consumers are completely unprotected with non-genuine software and should be guided by this goal.

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