<PAGE>
                                                                    Exhibit 10.1


[LOGO SCANSOFT(TM)]


March 9, 2004

John Shagoury

Dear John,

Congratulations! It is with great pleasure that I confirm our employment offer,
in the position of President of ScanSoft Productivity Applications of ScanSoft,
Inc., reporting to the Chief Executive Officer. Your start date for your new
position is Monday, March 15, 2004. Within six months of your date of hire I
will recommend to the Board of Directors that you be appointed an Executive
Officer.

Your starting annual base salary will be $250,000 paid on a semi-monthly basis.
In addition to your base salary, you will be eligible to participate in the 2004
Employee Bonus Plan, which pays a target of 20% of base salary, pro-rated
according to date of hire.

Once you have signed the offer letter, I will recommend to the ScanSoft Board of
Directors, a New Hire stock option grant of 400,000 shares, with a four-year
vesting schedule, 25% cliff after one year and monthly thereafter. I will also
recommend to the ScanSoft Board of Directors a restricted stock award equal to
two times your base salary as of the date of grant with a three-year cliff
vesting schedule with opportunities for accelerated vesting, based on achieving
company objectives over the next two years. Details of the stock option grant
and restricted share grant will be provided to you when they are finalized.

Should your employment be terminated without cause, and you execute a standard
severance agreement, you will receive a severance package of six month base
salary plus six months of paid health insurance under COBRA. Should your
employment with the company be terminated without cause within twelve months
following a change of control transaction, and you execute a standard severance
agreement, you will receive a severance package of twelve month base salary,
twelve months of paid health insurance under COBRA, plus immediate acceleration
of any unvested stock options or restricted stock.

As a full-time employee, you will be eligible for our comprehensive benefits
package. You will also be eligible to participate in the 401(k) plan effective
the start of the quarter following your date of hire (anticipated to be April 1,
2004). The enclosed material outlines all of our benefits to which you are
entitled as a ScanSoft, Inc. employee.

                                     1 of 2

<PAGE>

J. Shagoury Offer Confirmation Letter

Your employment with ScanSoft will be "at will", meaning that either you or
ScanSoft will be entitled to terminate your employment at any time and for any
reason, with or without cause. Any contrary representations which may have been
made to you are superseded by this offer. This is the full and complete
agreement between you and ScanSoft. Although your job duties, title,
compensation and benefits, as well as ScanSoft's personnel policies and
procedures, may change from time to time, the "at will" nature of your
employment may only be changed in an express written agreement signed by you and
a duly authorized officer of ScanSoft.

This offer is contingent upon your satisfying the conditions of hire, including
providing proof of your eligibility to work in the United States. An Employment
Eligibility Verification form is attached to this letter. Please read it
carefully and call me if you have any questions. Also, like all ScanSoft
employees, you will be required, as a condition to your employment, to sign
ScanSoft's standard Non-Compete, Proprietary Information, & Conflict of Interest
Agreement, a copy of which is attached hereto.

We, at ScanSoft, are proud of our reputation and we feel confident that you will
be a positive addition to the Sr. Management Team, while the position will
afford you the opportunity to grow your professional skill set.

John, we would appreciate it if you would confirm your acceptance of our
employment offer, by signing this offer confirmation letter and returning it to
my attention as soon as possible.

If you have further questions regarding our offer, feel free to contact me at
978-977-2125. Further questions regarding the new hire process or benefit
programs should be directed to Dawn Fournier, Vice President, Human Resources at
978-977-2417. I look forward to our working together and your joining the
ScanSoft organization.

Sincerely,

/s/ Paul Ricci

Paul Ricci, Chairman & CEO

/csr
 cc:      D. Fournier
          Employee File


Enclosures/Forms:   Employment Eligibility Verification form, Benefits Summary,
                    Non-Compete, Proprietary Information, & Conflict of Interest
                    Agreement.

I ACCEPT THE OFFER OF EMPLOYMENT AS STATED ABOVE:


/s/ John Shagoury                                 3/9/04
-------------------------------------             ------------------------------
NEW HIRE SIGNATURE                                DATE OF ACCEPTANCE

                                     2 of 2