With its tradition of lifetime employment in Japan, working as a permanent employee may still be the norm, but in the U.S. and other European countries where working styles are more diversified, a large percentage of people work on a contract basis. This is why you often associate fixed-term employment with contract employees, temporary workers, freelance workers who set up their own business and work as a sole proprietor, or nomad workers who work from any location they like, when you see or hear the term “non-permanent job” in Japan.
But there is actually more to it than meets the eye. In this article, we will give you more clarification about contract work and how you can take advantage of it in Japan by being the first movers in the industry.
Growing Demand for Contract Workers
A recent global survey conducted by SThree group, the global STEM-specialist talent partner (Computer Futures is part of the larger SThree group), found that the demand for contract workers in STEM fields is growing.
This is due to the high level of expertise required in many STEM fields, including IT. The contract-based hiring and working style allows companies to acquire necessary skills when they need, while allowing highly skilled IT professionals to participate in projects in a variety of industries and sectors, utilising their skills without being tied to an organisation, and achieving a work-life balance. This is an ideal job match for both parties in STEM fields, where specific skills are in high demand.
In the IT industry in Japan, an increasing amount of work is being done on a project basis, making contracting a very useful way to acquire talent and skills. This can include spot hiring on a project-by-project basis or when specific skills are needed for a specific period of time to implement a new tool which can also allow companies to resolve headcount approval challenges whilst saving costs at the same time. This has resulted in many mid-sized foreign companies using outsourced contracting to secure excellent skills and talent whilst global companies with large Japanese subsidiaries tend to use dispatched workers as they already have set frameworks for these workers.
All of these show the demand for contract workers in Japan, especially if you require highly skilled talent within IT. But contracting work in Japan can be quite confusing. As such, we’ve broken it down for you below to help both employers and job seekers in Japan understand it better.
Types of contract models
In addition to the two contract recruitment solutions we have been offering, Computer Futures started providing a new solution, ECM (Employed Contractor Model) in Japan since early 2022 due to the growing demand in Japan and our global success with this solution. Below are now three different contract models you can utilise.
・Haken (Dispatched workers)
A Haken (dispatched worker) model is where contractors are not employed directly by the company they are working for, but through an agency who sent them. Their salary is based on hourly rates and transport costs are often included in the hourly rate. Because of the nature and scope of the work, you will be able to specialise in a particular remit and will not have unrelated scope of work that are often associated with permanent employment.
Contracts are usually renewed every 3 or 6 months, and the maximum length of employment with the same client company is 3 years. If you end up working for the same company for more than three years, you will need to convert into a direct employment contract i.e. You will become an employee of the company you’re working for (either permanent or contractual) rather than a contractor through an agency.
・Outsourcing: Independent Contractor Model
Gyomu Itaku (Outsourcing) is not employment but a partnership. Independent contractors function like an agency themselves and partner with the client company. To work in an Independent Contractor Model, candidates are required to have an independent business or to have been registered as a sole trader (kojin jigyonushi). This model is less time-consuming for the client company, as Computer Futures is the one who provides the reporting line and work instructions.
・Outsourcing: ECM (Employed Contractor Model)
Our ECM (Employed Contractor Model) is a solution that offers many benefits to both employer and job seeker. In this model, candidates are hired as SThree’s employees, and work at our client company. In this sense, it works in the same way as Haken (dispatched) workers.
However, as a specialist, you will be able to participate in large-scale projects that are not usually assigned to Haken (dispatched) workers. Another advantage of this model is that it allows for a more flexible work style including more autonomy, as the reporting line is with Computer Futures (part of SThree) and not the client company.
As an employer, some of the benefits include not having to manage contractors, unlike Haken (dispatched workers). Since contractors are employed by Computer Futures (part of SThree), you can rely on us to handle all compliance-related matters, including the Japanese Labour Law. Another advantage ECM has is unlike an outsourced independent contractor, you can utilise any candidate who is not registered as a corporation or sole trader, giving you access to a wider pool of candidates.
You may click on the link below to get a clearer overview of the benefits and considerations for each of the contract model mentioned above which may differ for employers as well as job seekers.
Meet with our highly experienced contract recruitment team in Japan or reach out via the form below to find out more about how you can leverage the ECM model whether you’re an employer or job seeker in Japan.
Interested in contract hiring, ECM or contract jobs in Japan?
With the current growth in STEM fields, the demand for contractors in Japan is expected to increase even more in the future.
While our newest solution – ECM – offers more benefits to both employers and candidates, the best solution for you depends on your needs. If you are interested in leveraging contract workers as a temporary hire for a project, how you can take advantage of ECM, or use contract job opportunities as a steppingstone to a new career, please feel free to contact us using the form below and a dedicated consultant will be in touch with no obligation.