VARs are losing millions in lost revenue because of piracy, a joint report by Microsoft and IDC has claimed.

The IDC white paper, released today at Microsoft's World Partner Conference (WPC), has claimed that for every dollar lost by Microsoft, partners lose as much as $5.50 in missed revenue opportunities such as cross-selling and upselling, faster sales cycles and expanding their customer base.

Michala Wardell, head of anti piracy at Microsoft UK, told CRN: “It is great to have this knowledge and really show the impact of piracy on the channel. It is showing partners that they are losing out by five times more than Microsoft and we want to help them with that.

“Some partners are really good at combating piracy, however some are really bad. Partners need to tell Microsoft about the dodgy deals they come across so it can help with enforcement. Pirates do not call up and say, ‘Hi, I’m selling pirated goods come catch me if you can.’ Partners can help by reporting them to us.”

The white paper points out that piracy can happen in many areas such as velocity of sales, the life cycle of a project and the ability to fulfil contracts as negotiated can all be affected.

The paper gives the example of how a solution provider may have to stop work when it discovers pirated software or may be unable to sell its product at all as its has revealed that the customer’s architecture is illegal.

Wardell said the global report will eventually be broken down geographically, to understand the impact of piracy on the UK channel.

She added: “This report helps Microsoft to understand the impact of piracy and it wants to work with the channel to reduce this. A healthy channel benefits both Microsoft’s partners and Microsoft itself.”

John Gantz, senior vice president of IDC, said: “The flip side of this is that within those hidden costs may lay hidden opportunities in helping these customers turn their licensing situation around.

“Much of the misuse, especially in developed countries, is inadvertent. A savvy vendor can realise an opportunity by helping customers to ‘true up’ their licensing; realising that every dollar saved from software pirates can translate to over five times that amount for the channel.”