NACE ISIC 62 Computer programming Consultancy And related

NACE / ISIC 62 Computer programming, Consultancy And related activities Updated Sector Paper 27 th Voorburg Group Meeting October 1 -5, 2012 Warsaw, Poland Ruth Vizner, CBS Israel 2012 Voorburg meeting, Warsaw

Topics • Introduction • Industry Overview • Classification • Turnover Statistics • SPPI • Summary and Main Conclusion 2012 Voorburg meeting, Warsaw 2

Introduction History For Computer • During the 1990's studies from UK, Canada, New Zealand Czechoslovakia • 2002, 2003 Mini Presentation on SPPI and output from INSEE, UK, Sweden, Australia and Canada • 2007, 2008 papers from France, Sweden, Netherland the United States, results with a Sector Paper on Computer Programming, Consultancy and Related Activities by the BLS. 2012 Voorburg meeting, Warsaw 3

Results of Survey among NSOs ISIC/NACE 62 SPPI TURNOVER 6201 Computer Programming Activities 15 21 6202 Computer Consultancy and Computer Facilities Activities 16 21 6209 Other Information Technology Services 10 21 2012 Voorburg meeting, Warsaw 4

Industry Overview • The industry is growing in the last years • The market is dynamic, providing different • • • service products companies rapidly change the structure and content of services provided unique, bundled services Secondary activities subcontracting, off-shoring providing services in-house 2012 Voorburg meeting, Warsaw 5

Industry Overview Revenues in 2010 Germany - 80. 8 billion euro Japan - 11. 4 trillion yen Canada - 33. 2 billion dollar Spain - 21. 8 billion euro Korea - 23. 9 billion dollar 2012 Voorburg meeting, Warsaw 6

Size of industry Distribution of revenues among groups ISIC 62 ISIC Austria Sweden Norway Estonia Hungary Slovakia 6201 46. 4 46 19. 9 56 33 31 6202 42. 8 40 79. 7 24 28 24 6209 10. 8 14 0. 4 20 39 45 ISIC Germany Croatia Singapore Czech Korea Slovenia 6201 45. 5 67, 5 48 45. 7 70. 7 33 6202 35. 3 17. 1 44. 4 40. 3 29. 3 47 6209 19. 2 15. 4 7. 6 4 - 20 2012 Voorburg meeting, Warsaw 7

Classification - Industry ISIC 4 NACE 2 6201 Computer Programming 62. 01 Computer Programming Activities 6202 Computer Consultancy and Computer Facilities Activities 62. 02 Information Technology Consultancy Activities 62. 03 Computer Facilities Management Activities 6209 Other Information Technology Services 62. 09 Other Information Technology Service Activities 2012 Voorburg meeting, Warsaw 8

Classification - Industry NACE 2 / ISIC 4 NAICS US/Canada 6201 Computer Programming Activities 541511 Custom Computer Programming Services 541512 Computer System Design Services 6202 Computer Consultancy and Computer Facilities Activities 541513 -Computer Facilities Management Services 6209 Other Information Technology Services 541519 Other Computer Related Services 2012 Voorburg meeting, Warsaw 9

Classification - Industry all three classification systems are similar. NACE and NAICS specify Computer Facilities Management Services as a separate industry. ISIC combines this business activity with Computer Consultancy. 2012 Voorburg meeting, Warsaw 10

Classification – Products CPC vs. NAPCS CPC NAPCS 83131 IT technical consulting services 35000 IT technical consulting services 83132 IT technical support services 35501 Software related technical support services 35502 Hardware related technical support services 35503 Combined hardware and software support services 35504 Auditing and assessing computer operations 35505 Data recovery services 35506 Disaster recovery services, business continuity services 35507 Other IT support services 2012 Voorburg meeting, Warsaw 11

Classification – Products CPC vs NAPCS CPC NAPCS 83141 IT design and development services for applications 35050 Custom computer application design and Development services 35051 Web site design and development services 35052 Database design and development services 35053 Customization and integration of cross-industry application software 35054 Customization and integration of vertical market application software 35056 Other custom application design and development services 83142 IT design and development for networks and systems 35101 Computer network security design and development services 35102 Computer network design and 2012 Voorburg meeting, Warsaw 12

Classification - Products CPA vs ISIC CPA 2008 Computer Programming, Consultancy and related Services 6201 62. 01 Computer Programming Services 62. 01. 11 IT design and development for application 62. 01. 12 IT design and development for network 62. 01. 21 Computer game’s software original 62. 01. 29 Other software original 6202 62. 02 Computer Consultancy Services 62. 02. 10 Hardware consultancy services 62. 02. 20 System and software consultancy services 62. 03 Computer facilities management services 62. 02. 30 IT technical support services 62. 03. 11 Network management services 62. 03. 12 Computer systems management services 62. 09 Other information technology and computer services 62. 09. 10 Installation services of computer and peripheral equipment 62. 09. 20 Other information technology and computer services i. e. ISIC Rev. 4 6209 2012 Voorburg meeting, Warsaw 13

Turnover Statistics progress § All countries collect and publish turnover data § Most countries collect turnover data at the product § § § level and publish at the industry level All counties moved to the new classification European counties use NACE v. 2 and CPA 2008. North America countries use NAICS and NAPCS Australia use ANZIC Some countries use a local version based on ISIC Rev. 4 (Japan uses JSIC, Korea KSIC, Singapore SSIC) 2012 Voorburg meeting, Warsaw 14

Turnover Statistics data collection n Most countries use survey n The frame is the Business Register n Method for selection of companies is stratified sampling n according to size of turnover / number of employee / combination. n Some use combination of survey and administrative data n Few countries use census. n detailed data of industry and product level are available on SBS statistics 2012 Voorburg meeting, Warsaw 15

Turnover Statistics Challanges Challenges stem from the dynamic nature of the industry and the change in classification § Finding a predominate activity according to the new classification § Merger and acquisitions and new products and services § Outsourcing § Companies have a lot of secondary activities § Confidentiality issues for multinationals companies 2012 Voorburg meeting, Warsaw 16

Recommended Approach Category Data Source Level of Detail disadvantage s advantages Best Survey/Census Industry turnover detailed and product turnover detail -Most expensive - response burden detailed information on a timely manner Good Survey/Census or combination Industry detail only Expensive -Industry detail not sufficient -less response burden Minimum Administrative (tax data, industry association data etc. , ) Industry detail only -Least expensive -Little or no respondent burden - Imperfect Estimates - Not timely 2012 Voorburg meeting, Warsaw 17

SPPI • 16 of 21 countries have SPPI • 10 of 16 countries cover all 3 groups • 16 countries cover 6201 and 6202 6 countries don’t cover 6209 • 12 of 16 countries collect prices and publish on a quarterly basis • 3 countries, Czech, Japan and Korea, collect prices monthly and in Canada the index is Annual. • 2012 Voorburg meeting, Warsaw 18

Pricing method The most dominant is charge out rate § Characteristics of workers: professions, skill level, experience § Characteristics of service: kind of service, type of software, project and clients § All countries uses time based method for group 6201 computer programming services. For the other groups other pricing methods are used: contract pricing, direct use of prices of repeated services 2012 Voorburg meeting, Warsaw 19

Pricing method Example Subgroup Time-based Hourly charge-out rates for chief programmer for analysis 6201 Direct use of prices for repeated services Security services for network 6209 Percentage fees Percentage of software licenses 6202 2012 Voorburg meeting, Warsaw 20

Main pricing issues § subcontracting or outsourcing - charge out rates might not be good estimates of real price change when part of the job outsourced, especially when the subcontractor is an off-shore establishment. The solution is to take in account the off shoring effect and to reflect the change in labor composition in the charge out rates. § internal prices - companies that offer IT services inhouse. Company-internal prices are in general difficult to handle for index calculation because the price development isn’t always comparable to the development of market prices. § Changes in the labor productivity - are to be excluded from the charge out rates. 2012 Voorburg meeting, Warsaw 21

Recommended Approach Category Pricing method Data type in the survey and frequency Advantage Disadvantages Best Prices for repeated services, Real transaction prices, The information is available, specification allow comparison over time. response burden is moderate Not possible for unique services (costume software) May not reflect productivity changes Specification must be defined to Keep Price based on expert estimates. By using a fictitious service or a real service as a model Holding constant quality High response burden Need to be updated frequently The contract must specify the service Revenue and amount sold / time spend Least expensive lowest response burden Services must be sufficient homogeneous Price changes can be highly volatile - Time-based methods Good Model pricing Contract pricing Minimum Unit value The price for the time spent on the service is used as a proxy for the real price 2012 Voorburg meeting, Warsaw 22

Summary n Much progress has been done in the last years, since the last n n n Sector Paper on Computer Services, both in SPPI and Turnover data All counties moved to the new industry classification The most dominant pricing method is charge out rates It is recommended that charge out rates will be based on detailed specification that identifies both the workers qualifications and the service definition Constant quality SPPI present a challenge for computer services. Future improvements include effort to improve company’s cooperation 2012 Voorburg meeting, Warsaw 23

Thank You Very Much! RUTH VIZNER MAIL: VIZNER@CBS. GOV. IL 2012 Voorburg meeting, Warsaw