nace / isic 62 computer programming, consultancy and related activities updated sector paper 27 th...
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NACE / ISIC 62 Computer programming, Consultancy And related activities Updated Sector Paper
27th Voorburg Group MeetingOctober 1-5, 2012Warsaw, Poland
Ruth Vizner, CBS Israel
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Topics
• Introduction• Industry Overview• Classification• Turnover Statistics• SPPI• Summary and Main Conclusion
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IntroductionHistory For Computer
• During the 1990's studies from UK, Canada, New Zealand and Czechoslovakia
• 2002, 2003 Mini Presentation on SPPI and output from INSEE, UK, Sweden, Australia and Canada
• 2007, 2008 papers from France, Sweden, Netherland and the United States, results with a Sector Paper on Computer Programming, Consultancy and Related Activities by the BLS.
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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
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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
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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
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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
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Classification - Industry
ISIC 4 NACE 2
6201 Computer Programming Activities
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
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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
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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.
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Classification – ProductsCPC 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
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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
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Classification - ProductsCPA vs ISIC
ISIC Rev. 4
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
6209 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.
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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)
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Turnover Statistics data collection
Most countries use survey The frame is the Business Register Method for selection of companies is stratified sampling according to size of turnover / number of employee /
combination. Some use combination of survey and administrative data Few countries use census. detailed data of industry and product level are available
on SBS statistics
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Turnover StatisticsChallanges
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
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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
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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.
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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
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Pricing method
Pricing method Example Sub-group
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
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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 in-house. 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.
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Recommended Approach Category Pricing method Data type in the
survey and frequency Advantage Disadvantages
Best Prices for repeated services,
- Time-based methods
Real transaction prices,
The price for
the time spent on the service is used as a proxy for the real price
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
Good Model pricing
Contract
pricing
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
Minimum Unit value Revenue and amount sold / time spend
Least expensive lowest response burden
Services must be sufficient homogeneous Price changes can be highly volatile
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Summary
Much progress has been done in the last years, since the last 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
