Businesses using unlicensed software are operating under a "false economy", according to the Business Software Alliance (BSA).

The BSA also said that the financial penalties for using unlicensed programs could be significant. The comments came soon after the Federation Against Software Theft found that a large proportion of businesses in the UK would be hard pushed to prove that their software is legal.

"The reasons given [for not using licensed software] are often related to the cost of software; however buying pirate software or using unlicensed software is a false economy," said BSA's Ram Dhaliwal.

He also warned about the security of such software, reinforcing the idea that all firms should make sure they have adequate IT support in place.

"Studies have shown that counterfeit software has a high probability of containing viruses, spyware or Trojans," he said.

"The current rate of software piracy amongst UK businesses is 27 per cent and this rate has remained static for the past three years."

The danger of using unlicensed software was illustrated in the US recently. Three firms based in California settled for more than $700,000 with the BSA for unlicensed software use.