Even as the current economic climate has compelled the Indian government to go on the austerity drive, by asking its ministers to air travel by economy class – a more compelling option may lie in looking at replacing proprietary software with open source. A recent report titled, 'Economic Impact of Free and Open Source software – A Study in India', by a team at IIM-Bangalore, highlights several interesting insights, that show how by replacing just 50 percent of proprietary software with open source in desktops and servers, India can save close to Rs 10,000 crore in 2010.

For example, retail PC sales are projected to reach 5.47 million units by 2010. If open source software is used instead of proprietary software in only 50 percent of the projected retail PC base, then savings per PC for replacement of Office Productivity tools, is estimated to be Rs 16,500 per unit, says the IIM-B study. The total savings for the 50 percent (2.735 million units) of the projected retail PC base (using open source software) amount to Rs 4,512 crore. Similarly, for the enterprise PC market, the total savings at 50 percent projected sales of enterprise PCs in 2010, amount to a staggering  Rs 4638 crore. Applying the same logic on the server side, the study says that total savings amount to Rs 138 crore.

Led under the guidance of Professor Rahul De from IIM-Bangalore, the report has been compiled by studying the experiences of twenty Indian organizations drawn from government departments, commercial firms and educational institutions. “Contrary to popular perception, open source adoption is accelerating in the country. While a majority of the enterprises that we surveyed used open source first because of cost reasons, they have subsequently discovered other compelling benefits. These benefits include scalability and security, with no additional costs,” says Professor De.

While the study mentions some small scale organizations too, it is clear that the bigger the organization is, the bigger are the benefits of going in for an open source model. Professor De cites the example of the Life Insurance Corporation of India (LIC), which has saved close to Rs 42 crores by migrating from using proprietary software on its servers and desktop to open source. Today, LIC has migrated all its servers to Linux, and uses Linux on close to 60 percent of its desktop base of over 30,000. National India Assurance (NIA), is another stellar example of a firm, that has migrated about 1500 servers to Linux. The firm also uses Linux in 4,000 desktops, out of a total base of over 7,000 desktops. The estimated cost savings are close to Rs 80 crore. Considering the scale at which large enterprises such as LIC and NIA operate, the move to an open source model can truly generate massive savings. This is also true for state governments. For example, the IT@School project of Kerala replaced Windows software with open source on 50,000 desktops in schools across the state. As a result, tangible benefits amount to Rs 49 crore.

Professor De says that it is largely misperception, and a lack of awareness that have acted as barriers, for adoption of open source. He cites the success of organizations such as LIC and NIA, who have proved beyond doubt, the success of adopting an open source model – even on the desktop. “Enterprises must first look at an open source alternative, before they sign off on a purchase agreement. As a policy recommendation, RFPs must include open source software,” says Professor De.

With a bulk of the savings coming from the initial cost of acquiring the software, supporters of proprietary software say that acquisition costs are not vital, as they amount to only a fraction of the Total Cost of Ownership (TCO) over a period of say, three years. Proprietary software supporters counter that if enterprises factor in costs related to training and support, the TCO of open source may be more than proprietary software. That said, Rs 10,000 crore is just too big a number to be ignored – especially in these times of austerity.