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Globally, there has been a hiring frenzy for tech talent and Japan is no exception. However, as the country continues to capitalise on its booming tech market, talent around the world are also taking notice of the growing ‘Japanese Dream’.


What is the ‘Japanese Dream’?

In short, the ‘Japanese Dream’ refers to job stability, a high salary package and an innovative tech sector. Japan has been known for their job stability which also translates into lifetime employment.  In fact, Tokyo also recently topped a list of the world’s most innovative cities, leapfrogging London and New York after embracing the globe-shaking trends of robotics and Artificial Intelligence (AI). To add on, Japan has also been experiencing an upward pressure on salary packages.

All of the above have created an environment to compete for cutting-edge talent even with economic giants like China and places like the Silicon Valley in the US. The latter have also been increasingly on the edge as talent starts to flock away from its seemingly stifling environment.

But despite such positivity in Japan’s tech sector, what are some of the concerns to be dealt with that may counter the attractiveness of its country?

 ・Tech talent shortage in Japan

Japan is predicted to face a growing shortage of workers in "frontier IT" -- big data, AI and IoT – and this is expected to reach about 48,000 by 2020, and a shortfall of nearly 200,000 information security workers.

 ・Ability to retain employees

Tech organisations in Japan are also facing difficulties in retaining and keeping their employees up-to-date with the relevant skills of today. With in-demand skills evolving rapidly, organisations should focus on continuously re-skilling employees so that they can be more agile in meeting the changing needs of the business. Some of the main areas to focus on would be cryptography and robotics which are key areas that are up and coming.


What are some of the efforts taken to ease the above concerns?

 ・Lowering barriers for skilled migrant talent

Attracting foreign talent to Japan has always been a difficult task. Language, for one, is a big barrier.

However, as more companies in Japan begin to embrace globalisation and are more open to inflows of cultures and trends, the workforce have slowly evolved into one that is more welcoming.

The barriers have also eased because the government has acknowledged that companies will not be able to withhold enough skilled IT professionals. As such, highly skilled immigrants – for whom the government has made it easier to get permanent residency – now have a reduced required period of residency from 5 years to 1, and speaking Japanese is no longer a requirement.

These efforts have set an example to many of the tech companies as well as start-ups in embracing foreign talent.

Ascent Robotics, a Tokyo tech start-up welcomes foreign talent to its business. It develops artificial intelligence for driverless cars and robots which are prominent sectors that are low in supply of talent. However, the firm receives an average of 500 applications per month from overseas applicants, according to chief investment officer James Westwood.

Reported in an article, he mentioned "People already want to be here, you just have to give them an opportunity," he says. James himself is one of 49 foreigners at the firm, with only 11 locals.

Line's office in Kyoto, also turned out to be a big draw for foreign hires. And this could be due to various reasons such as the ability to take advantage of Japan’s booming tech scene whilst enjoying the tranquillity of Kyoto. With the main headquarters based in Tokyo, the company operates a messaging app that's used by half of Japan's population each day, but the service isn't as popular outside of Asia. Despite this, Line found itself inundated with 800 applications that came from around the world. So far, 13 of the 20 engineers hired for the office have been foreigners.

Although Japan is one of the world’s most homogenous countries, where only 2% of residents are foreigners, acceptance of foreign labour is gradually increasing. This will help tide the shortfall of talents in the region gradually, as well as ease the ease the burden of foreigners intending to come into Japan.

 ・Improving retention rates

Retention is one of Japan’s top priority. Based on a recent LinkedIn report, the tech sector has one of the highest turnover rate at 13.2%.

From the same report, here are some of the reasons for tech employees leaving their jobs.

Technology companies need to provide more room for career growth within their organisations. Employees are less likely to stay on in a limiting organisation or that with a lack of career progression. To tap into the best talent, research suggests that companies must first think about the types of rewards that are most important to their employees, particularly those that are differentiating yet reinforces company culture. Companies should then target those rewards at a competitive market point. Ultimately, firms will rehire, retain and retrain the technologically unemployed because labour is scarce. 

Japan is projected to lose one-third of its workforce by 2065 because of its demographics. In an era which computers run everything, computer scientists and engineers are in extreme high demand and would tend to job-hop frequently as an increasing number of them get poached. As a result, more efforts will be needed to revise hiring approaches and retention strategies in order to sustain the growth of organisations today.


Moving forward: New focus on Osaka as a hotbed for tech start-ups?

Successful tech sectors are a result of the ability of organisations working together as a ‘hub’. Located at the heart of Japan’s second-largest metropolitan area, Osaka is emerging as a start-up hotspot based on dynamic government support programs. The city and prefecture has brought forth long-established Japanese brands such as Panasonic, Sharp, as well as more recently founded high-tech firms including Sakura Internet and Capcom. There are also an estimated 1,000 early-stage seed start-ups in Osaka.

Japan will need to capitalise on its strengths as an attractive innovation hub in order for its tech sector to flourish. Given the greater awareness of its potential locally, more organisations are putting in the extra ounce of effort to improve on its hiring approach.

If you like to find out more on how tech companies are coping with talent shortages, do connect with us on Linkedin or drop us email at contactjapan@computerfutures.com. For more industry related information, visit our website at www.computerfutures.com.