Software Escrow is when source code for a specific software is kept with a third party escrow agent providing a middle man between the person licensing the software and the person licensing out the software.
A few purposes of Software Escrow are:
Using software escrow provides the business licensing the software with a cheaper solution as the price will usually be less when the software developer retains the rights to the source code. For companies that also become the owners of the software that they have outsourced to be developed no software escrow is needed.
Software escrow gives the business licensing the software somewhat of a safety blanket in the case that their software developer is unable to provide the necessary services to maintain the software as is required by the licensee. The contact between the parties should stipulate the details of arrangement for eg. what conditions must be met in order for the licensee to be given access to the source code and what if any are the restrictions on how they are able to use the software source code.
All in all I think it is something that anyone going into a software arrangement should be knowledgeable of, as using software escrow might be a smart option for their particular business scenario.