NACE / ISIC 62 Computer programming, Consultancy And related activities Updated Sector Paper

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

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

3. 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. 2012 Voorburg meeting, Warsaw

4. Results of Survey among NSOs 2012 Voorburg meeting, Warsaw

5. 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

6. 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

7. Size of industryDistribution of revenues among groups ISIC 62 2012 Voorburg meeting, Warsaw

8. Classification - Industry 2012 Voorburg meeting, Warsaw

9. Classification - Industry 2012 Voorburg meeting, Warsaw

10. 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

11. Classification – ProductsCPC vs. NAPCS 2012 Voorburg meeting, Warsaw

12. Classification – ProductsCPC vs NAPCS 2012 Voorburg meeting, Warsaw

13. Classification - ProductsCPA vs ISIC 2012 Voorburg meeting, Warsaw

14. Turnover Statisticsprogress • 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

15. Turnover Statisticsdata 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 2012 Voorburg meeting, Warsaw

16. 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 2012 Voorburg meeting, Warsaw

17. Recommended Approach 2012 Voorburg meeting, Warsaw

18. 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

19. 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

20. Pricing method 2012 Voorburg meeting, Warsaw

21. 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. 2012 Voorburg meeting, Warsaw

22. Recommended Approach 2012 Voorburg meeting, Warsaw

23. 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 2012 Voorburg meeting, Warsaw

24. Thank You Very Much! RUTH VIZNER MAIL: VIZNER@CBS.GOV.IL