Economic Impact of Free and Open
Source Software – A Study in India
Rahul De'
Hewlett­Packard Chair Professor
Indian Institute of Management Bangalore
INTEROP Mumbai
7­9 October, 2009

Overview
● Scope of Project
● Highlights of Sample Case Studies
● Analysis of Economic Impact
● Policy Implications
● Conclusion
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Scope of Project
● Case studies of 20 Type of Organisation Studied
organisations that have
adopted FOSS
20% Government
● Examine cost savings, 55%
Dept
Large Firm
administration and SME
NGO
Higher Ed
innovation with FOSS 5%
5%
● Exploratory study 15%
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Case Study: IT @ School
● The IT @ School project of Kerala replaced
Windows software with FOSS on 50,000 desktops
in schools across the state. Tangible benefits
amounted to Rs 49 crores ($ 10.2 million).
● Intangible benefits:
● easier development of support software
● local language customisation
● improved teacher confidence
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Case Study: Great Market
● Great Market (name changed), a large e­commerce
firm, adopted FOSS for servers, MIS development,
document management and for desktops. The
savings from desktops alone came to Rs 30 lakhs
($ 63 k).
● Intangible benefits:
● increased security
● scalability and stability
● access to state­of­the­art technology
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Case Study: Life Insurance
Corporation of India
● Life Insurance Corporation (LIC) is one of the
largest insurers in India, with an IT infrastructure
of 3500 servers and 30,000 desktops, saved about
Rs 42 crores ($ 8.75 million) by adopting FOSS.
● Intangible benefits:
● ability to experiment with new technologies
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Case Study: New India
Assurance Company
● The New India Assurance company, a general
insurance firm, has 1100 offices, and an IT
infrastructure of 1500 servers and 7000 desktops;
save about Rs 80 crores ($16.7 million) per annum
in tangible costs
● Intangible benefits:
● increased security
● control over pirated software
● easy updates
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Case Study: GGG
● GGG (name changed) is a medium­sized e­
commerce solutions IT firm that relies heavily on
FOSS. GGG saved about Rs 36 lakhs ($ 75k) by
using FOSS on its desktops.
● Intangible benefits:
● improved performance
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Case Study: IT for Change
● IT for Change, an NGO with 30 employees. Use
FOSS extensively on all servers and desktops.
Estimated tangible savings of about Rs 1.2 lakhs ($
2.5k) per annum
● Intangible benefits:
● help with advocacy on IT benefits
● reduced threat of viruses
● easy upgradation
● convenience of distribution
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Case Study: Institute of
Informatics and Communication
● IIC is an institution of higher education that has
adopted FOSS. The tangible benefits for an
infrastructure of 100 desktops and 5 servers is
about Rs 17.5 lakhs ($ 36k).
● Intangible benefits:
● a learning environment of free and open thinking
and innovation
● ability to choose technology, not driven by
vendors
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Why Adopt FOSS?
● The most important reason for adopting FOSS is to
save costs on the acquisition of IT. This factor was
evident, with varying degrees of importance, in 18
of the 20 organisations studied.
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How was Economic Impact
Measured?
● The economic impact of FOSS was measured by
three principal means:
● FOSS as a substitute for more expensive desktop operating
systems and office productivity applications
● FOSS as a substitute for more expensive server software
● FOSS enabled cost savings from complementary products
such as anti­virus software required on Windows desktops
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Cost Savings Estimated
from Retail PC Sales
● Savings on replacement of operating system
software with FOSS products on 50% of forecast
retail PC sales
Projected retail PC sales in 2010 5.47 million units
50% of projected retail PC sales in
2010 2.735 million units
Savings per PC for operating system
costs Rs 3600 per unit
Total savings for OS software at 50% Rs 984.7 crores
projected sales of retail PCs in 2010
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Cost Savings Estimated
From Retail PC Sales
● Savings on replacement of office software tools with
FOSS tools on 50% of forecast retail PC sales
50% of projected retail PC sales in
2010 2.735 million units
Savings per PC for replacement of
Office Suite with FOSS products Rs 16,500 per unit
Total savings for office software at
50% projected sales of retail PCs in Rs 4,515.2 crores
2010
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Cost Savings Estimated
from Enterprise PC Sales
● Savings from replacement of proprietary software
with FOSS on 50% of forecast sales of enterprise
PCs
Projected enterprise PC sales in 2010 4.64 million units
50% of projected enterprise PC sales
in 2010 2.32 million units
Savings per PC for replacement of
operating system and office software
with FOSS products Rs 20,000 per unit
Total savings at 50% projected sales Rs 4,638.8 crores
of enterprise PCs in 2010
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Total Estimated Savings
● Total estimated savings from use of FOSS on
forecast PC sales in 2010
Savings from replacement of operating
system software with FOSS on retail sales
of PCs Rs 984.7 crores
Savings from replacement of office tools
with FOSS on retail sales of PCs Rs 4,515.2 crores
Savings from replacement of proprietary
software with FOSS on enterprise sales of
PCs Rs 4,638.8 crores
Total Rs 10,138.7 crores
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Cost Savings Estimated from
Enterprise Server Sales
● Savings from use of FOSS on forecast server sales
in 2010.
Projected total server sales in 2010 138000 units
Savings per server with usage of
FOSS products (a conservative
estimate) Rs 10,000 per unit
Total savings based on projected Rs 138.0 crores
sales of servers in 2010
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Savings From Cost of Anti-
Virus Software
● Anti­virus software sales in 2010 is likely to touch
Rs 2000 crores ($416 million). This is a
conservative estimate based on ceteris paribus
assumptions (that all else will remain the same).
This entire amount is a cost that can be avoided if
FOSS products are adopted.
● Cost savings from anti­virus software is lower than
the damage wrought by virus attacks and
consequent productivity losses.
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Intangible Benefits
● FOSS has very strong intangible benefits
● Increased security; reduced threat of viruses
● Control over pirated software
● Access to state­of­the­art technology
● Ability to experiment and innovate
● Choice of technology not driven by vendors
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Policy Implications
● Governments should actively encourage use of
FOSS in schools. Across India the savings can be to
the extent of Rs 27 billion
● Public offices and departments should ensure FOSS
technologies are included in all IT acquisition
tenders and request­for­proposals
● Government should inform/educate public on
benefits of FOSS; create labs for public to sample
and learn FOSS
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Conclusion
● FOSS is a mainstream alternative to proprietary
software
● Our computations show that the tangible benefits of
FOSS are significant
● In the year 2010, if FOSS is adopted at 50% levels across
the economy, the total savings are likely to be about Rs
10,139 crores ($ 2 billion )
● FOSS has immense intangible benefits that can have
a strong impact if there is widespread adoption
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Thank you very much!
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