Software escrow is typically an agreement between three parties – the software provider, the end-user, and the escrow agent. The primary goal of the software escrow agreement is to provide comfort and assurance to the software user in case the software provider is unwilling or unable to support the software. Under the agreement, the software provider hands over the source code and other necessary documentation to the escrow agent. The agent keeps the documentation in a secured vault and releases them to the software users when the vendor goes out of business or bankrupt or does not support the software or any mutual agreed event.
From a customer’s perspective, you should use a software escrow if you feel like the software provider may go out of business or is unable to continue the service in the future or Bankrupt or any reason whatsoever. From a provider’s perspective, you cannot just hand over the source code to the user because it is a big business risk. While it is your responsibility to take care of the customer needs even if you go out of business, using a software escrow will ensure that your source code and other important documents are secure until they are released to the user.