Unlicensed software remains a major global issue for both the technology companies that produce it and the businesses that use it. Despite the rise of cloud-based Software-as-a-Service (SaaS) and strict subscription models, the scale, and consequences of using unauthorized software continues to grow.

About 37 percent of software installed on PCs worldwide is unlicensed. It is estimated to cause $46 billion in annual revenue loss for the software industry. While North America has some of the lowest rates of unlicensed software use, it still accounts for billions in commercial value loss.

What Are the Risks of Unlicensed Software?

Organizations that use unlicensed software also face significant financial risks. Major developers employ aggressive compliance teams and use built-in telemetry data to track unauthorized use. If caught during an audit, organizations can be hit with retroactive licensing fees and damages that can reach hundreds of thousands of dollars. It can cripple smaller organizations.

There is also a direct correlation between unlicensed software and cyberattacks. Roughly one-third of unlicensed software is infected with malware. Additionally, unlicensed programs cannot authenticate with central servers to pull security patches and version updates. This leaves company networks exposed to ransomware and data breaches.

Do Employees Play a Role?

Employees frequently introduce unlicensed software into company environments. They may download tools they believe will help them work faster without waiting for company approval. In some cases, employees download unlicensed versions of expensive software because they assume the company will not pay for it. They may also use software that is free for personal use but requires a license for business use.

License overuse is a major part of the problem. This happens when a company legitimately purchases software but installs it on more devices than permitted or fails to properly manage user seats. Employees may install single-user software on multiple company machines or download software without asking if there are enough licenses available.

How Can Organizations Avoid Unlicensed Software?

Organizations should implement a formal policy prohibiting the installation of unauthorized software on both company-owned and BYOD devices. They should use tools to track installed software and prevent unauthorized applications from running on the network. Routine audits of computers and network activity can also identify and remove unlicensed software. IT teams should remove user permissions to install software and take responsibility for managing all software installations.

Employees have a responsibility as well. It starts by learning the risks and understanding that the use of unlicensed software is illegal. It’s important to: