Outsourcing and Volume Licensing

Outsourcing is a popular choice among customers for whom IT management is secondary to their main line of business. This report does not cover licenses used by application service providers who host applications and charge customers on a monthly or quarterly basis, but conventional volume licenses are often part of outsourced IT services, such as those provided by “managed service providers.”

Who owns the licenses when a company contracts with another organization to run its internal IT infrastructure?

In general, licenses acquired through volume licenses are intended for the internal use of the customer. “Internal use” refers to software used to conduct the customer’s own business, even if that includes communication with external partners or customers. The customer pays license invoices and owns the software licenses that it acquires for internal use, regardless of whether the customer acquires the licenses or an outsourcer acquires the licenses on behalf of the customer.

A customer cannot transfer software licenses to an outsourcer and continue to use them. Once the licenses are transferred, they can only be used for the outsourcer’s own internal use, and not by other organizations.