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Economic Impact of Free and Open Source Software— A Study in India

The above title belongs to a case study conducted by the Indian Institute of Management, Bangalore’s Rahul De. In September 2009, he released this paper based on twenty case studies of Indian organisations drawn from government departments, commercial firms and educational institutions. We reproduce his findings below:

  • FOSS (Free and Open Source Software) is used by all the twenty organisations. FOSS use may be as an operating system on a desktop or server, or as an application. Some of the benefits realized by the organisations studied are as follows
  • 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. 490 million ($ 10.2 million).
  • Great Market (name changed), a large e-commerce firm, adopted FOSS for servers, MIS development, document management and for desktops. The savings from desktops alone came to Rs. 3 million ($ 63,000).
  • Life Insurance Corporation (LIC), one of the largest insurers in India, with an IT infrastructure of 3500 servers and 30,000 desktops, saved about Rs. 420 million ($ 8.75 million) by adopting FOSS.
  • The New India Assurance company, a general insurance firm, having 1100 offices, and an IT infrastructure of 1500 servers and 7000 desktops saved about Rs. 800 million ($ 16.67 million) in tangible and intangible costs.
  • GGG (name changed) is a medium-sized e-commerce solution IT firm that relies heavily on FOSS. GGG saved about Rs. 3.6 million ($ 75,000) by using FOSS on its desktops.
  • IT for Change is an NGO with about 30 employees. They use FOSS extensively on all their servers and desktops and estimated tangible savings of about Rs. 0.12 million ($ 2.5 thousand) per annum (on an IT budget of Rs. 2.1 million or $44,000).
  • IIC (affiliated with Delhi University) is an institution of higher education that has adopted FOSS. The tangible and intangible benefit for an infrastructure of 100 desktops and 5 servers is about Rs. 1.75 million ($ 36,000).
  • The most important reason for adopting FOSS was to save costs on the acquisition of IT. This factor was evident, with varying degrees of importance, in 18 of the 20 organisations studied.
  • 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 anti-virus software required on Windows desktops
  • The forecast cost savings in the year 2010 from replacement of proprietary software with FOSS software is depicted in the table below. All numbers are estimates in Rs. millions.
Replacement by FOSS Cost Savings
50% of desktop operating system sold in the retail market with FOSS alternative. Saving assumed to be Rs. 3600 per unit. Rs. 9,847 million
$205 million)
50% of desktop office productivity tools sold in the retail market with FOSS products. Saving assumed to be Rs. 16500 per unit. Rs. 45,152 million
($940 million)
50% of desktop software sold in the enterprise market with FOSS products. Saving assumed to be Rs. 20000 per unit. Rs. 46,388 million
($966 million)
Total Rs. 101,387 million
($2,111 million)

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