The Hidden Code of Software program: How NAICS Classifies the Software program Trade

Software program is in every single place. It powers our telephones, computer systems, vehicles, and even our fridges. However how will we categorize software program as an trade? How will we measure its measurement, progress, and influence? That is the place NAICS is available in.

NAICS stands for North American Trade Classification System. It’s a customary system that assigns codes to completely different industries based mostly on their financial actions. NAICS codes are utilized by governments, companies, and researchers to gather, analyze, and evaluate information on numerous sectors of the economic system.

One of many challenges of classifying software program is that it’s not a tangible product, however a service or a course of. Software program will be embedded in {hardware}, distributed on-line, or personalized for particular customers. Software program may also be used for various functions, akin to leisure, training, or enterprise. Subsequently, software program doesn’t have a single NAICS code, however a number of codes relying on its operate, kind, and market.

For instance, software program publishers have the NAICS code 511210. This trade includes institutions that produce and distribute software program, akin to designing, growing, and publishing software program, or publishing and reproducing software program. These institutions could publish and distribute software program remotely by way of subscriptions and downloads.

One other instance is customized laptop programming companies, which have the NAICS code 541511. This trade includes institutions that write, modify, take a look at, and assist software program to satisfy the wants of a specific buyer. These institutions can also present consulting companies associated to software program growth.

A 3rd instance is laptop methods design companies, which have the NAICS code 541512. This trade includes institutions that plan and design laptop methods that combine laptop {hardware}, software program, and communication applied sciences. These institutions can also set up and keep the methods they design.

These are simply among the NAICS codes that relate to software program. There are a lot of extra, akin to software program and different prerecorded compact disc, tape, and document reproducing (334614), electronics shops (443142), and information processing, internet hosting, and associated companies (518210).

By utilizing NAICS codes, we will acquire a greater understanding of the software program trade and its subcategories. We are able to additionally evaluate software program with different industries and see the way it contributes to the economic system. As an example, based on the U.S. Census Bureau, the software program publishers trade had a complete income of $276.5 billion in 2019, which was 1.3% of the entire U.S. income. The customized laptop programming companies trade had a complete income of $142.9 billion, which was 0.7% of the entire U.S. income. The pc methods design companies trade had a complete income of $224.7 billion, which was 1.1% of the entire U.S. income.

Software program is a fancy and numerous trade that has a big influence on our lives. By utilizing NAICS codes, we will uncover the hidden code of software program and admire its worth and potential.