What does it take to put a price tag on open source software (OSS), a resource so critical to the global economy that some 96 percent of commercial programs include some code created, tinkered with, or distributed for free by public-facing tech forums?
A new paper presents an eyebrow-raising figure. Without open source software and their ubiquitous code-creation networks, firms would pay an estimated 3.5 times more to build the software and platforms that run their businesses, or roughly $8.8 trillion, say Harvard Business School assistant professor Frank Nagle and two colleagues.
The staggering scope of the findings could help put a value on the work, so senior leaders and non-tech managers at firms understand just how important hiring open source expertise is to success. The results mark among the first comprehensive figures to quantify how ubiquitous and integrated open source has become, illuminating that the products are often the backbone on which many companies build tech operations and the products they sell, Nagle says.
“To be able to say, ‘Look, this is no longer small. This is very, very large. And it’s very important. And this is a whole swath of the economy itself,’ gives open source advocates—some of them are embedded deep in IT departments trying to convince their superiors—ammunition that this stuff is valuable, and leaders should be supporting it in whatever way that means,” explains Nagle.
Measuring open source impact
Nagle co-authored the paper with Manuel Hoffmann, a postdoctoral scholar at the Laboratory for Innovation Science at Harvard (LISH) at the Digital Data Design Institute at Harvard, and Yanuo Zhou, a doctoral candidate at the University of Toronto.
To quantify the dollar value of OSS, the authors turned to two major sources: Census II of Free and Open Source Software, a joint project by the Linux Foundation and LISH released in 2022, and BuiltWith, a service that scans almost 9 million company websites to understand how they’re built, including what open source code they use. Just 18 code packages overlapped between the two sources, making the two datasets complementary.
Although they looked at all programming languages, they narrowed in on the top five based on data from GitHub: C (including C# and C++), Java, JavaScript, Python, and Typescript. They also included the Go programming language.
To figure out what it would cost to replace the free human labor behind open source platforms, the researchers calculated the estimated cost for an individual to recreate the software packages by measuring the number of lines of code. The team calculated how many hours it would take to write the code from scratch, using the COCOMO II model and wage data from Salary Expert to factor global and regional labor costs differences.
‘Nobody’s going to believe this’
The authors say their study is likely the most comprehensive so far on the topic. However, they caution that their findings may underestimate
open source software’s value, in part because their study didn’t include operating systems, the part of a computer system that controls all the other programs.
“When we first came up with numbers in the trillions, we thought, ‘Nobody’s going to believe this,’” Nagle says. “But then, when we started digging a little bit more, and thinking about the global demand for software and what companies already spend on software, combined with the fact that open source has become so predominant in so many companies whether they know it or not, then that giant number started to seem more feasible.”
The $8.8 trillion number represents the demand-side value of OSS—if OSS did not exist at all, and every company that used it had to rewrite that software from scratch. From the supply side, it would cost some $4.2 billion to build those software packages—if OSS existed, but all of the most widely used packages were deleted and needed to be rewritten, the research finds. Further, some 5 percent of programmers were responsible for more than 90 percent of the value created for both supply and demand, Nagle adds.
Why open source is critical to startups
Open source participation is integral for startups—and their ability to secure more funding, Nagle found in a separate study
co-authored with HBS Professor Shane Greenstein and Nataliya Langburd Wright, an assistant professor at Columbia Business School. There, research indicates that open source contributions spur entrepreneurial—and overall—economic growth worldwide.
“We find a robustly positive relationship between OSS contributions and entrepreneurial growth,” the authors write. “Higher-quality firms are more likely to contribute to OSS, and OSS boosts their subsequent performance.”
Translating the OSS factor for your business
- For IT managers, knowing the value of OSS provides an opening to talk to bosses about resources, Nagle says.
“It gives IT managers a way to have conversations with their higher ups, to say, ‘look, we use all this stuff for free. And if it didn’t exist, we’d be paying a whole lot more,” Nagle explains. “So we should spend at least some little fraction of that on allowing our people to contribute back to open source, especially the projects that we rely on heavily.’”
- For executives, consider that there’s often just one or two people in IT who understand open source activity for a given OSS project. But that can leave a company vulnerable, a realization that is slowly making its way into upper management as firms consider hiring employees to spend at least part of their time dedicated to OSS.
“Boards have to be thinking and understanding that by using open source, they’re saving lost lots of costs,” Nagle says. “They’re also exposing themselves to the risk that a single person getting run over by a bus may blow up the whole company.”
- For hiring managers, there’s clear reason to recruit and retain open source experts. “Companies are recognizing that there’s value in hiring these people and then having them on your team and even paying them to spend part of their time doing what they love: working on open source and maintaining open source,” Nagle says.
- For policymakers already focused on open source security, more attention should be paid to supporting the system overall, Nagle says.
“As with many things on tech, the European Union is a bit ahead of the United States, but certainly the US has been doing more about open source and trying to support it,” Nagle says. “Recently, there have been efforts to have the government use more open sources as a cost saver, and also to make it easier for government engineers to give back to open source in various ways.”
These results add substantial weight to the arguments that open source advocates have been making for years, Nagle says: Open source supports the entire modern economy and has become an irreplaceable necessity in which society must invest.
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