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Escrow releases surge in 2009 as recession hits UK software vendors

06 Jan 2010

NCC Group, a global leader in software escrow provision, has reported a 150 per cent increase in source code releases in 2009, compared with 2008, as businesses’ relationships with software suppliers becoming increasingly strained under recessionary pressures.

Jon Leigh, operational director for Escrow at NCC Group's UK HQ, said: “As with so many supplier-customer agreements in 2009, a number of software providers have struggled to stave off insolvency and have seen client relationships tested as a result.”

Access to crucial software that businesses do not own or control is ensured if an escrow agreement is in place. The escrow provider securely holds a copy of the software source code on behalf of the company at the agreement of the application provider. Should the software supplier become bankrupt, or default on contractual obligations, the escrow provider can legally release the material so that the company can continue to operate the application with minimum disruption to their business. Releases have increased dramatically in 2009, and are predicted to stay high as UK economic growth remains flat.

Leigh commented: “Whilst many businesses are finding themselves in the unfortunate position of having to chase partners for payment, or even source new suppliers, it is easy to forget the very real risk of losing the ability to use and maintain one of their most valuable assets – their business critical software.

“The devastating effects of the downturn are well documented, and for businesses suffering during the recession, losing essential software could be the final nail in the coffin. The potential for software companies to become bankrupt is very real. In turn, escrow should be considered as an essential facet of a wider disaster recovery strategy.”

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