We’ve been talking a lot about the shortage of software engineering talent, and nowhere is the talent situation worse than in Japan. The 2013 Manpower Group survey reported that Japan is facing an 85% talent shortage, which is huge compared to the average global talent shortage rate of 35%. In 2011, 45% of employers in Asia Pacific were having difficulty filling jobs due to lack of talent. Positions for technicians, engineers and IT staff were among the hardest positions to fill with lack of experience and lack of available applicants as the top reasons for rampant vacancies.
Why is there such a huge talent gap in Japan, compared to the rest of the world?
Not only have software sales more than doubled in the past 10 years (from about $60 billion to $140 billion), but the oldest software engineering workforce retired around 2007, leaving a huge skill gap along with many new vacancies. While the demand for software increased, the number of workers has increased only by about 20,000 in the last ten years, creating a huge workforce gap.
Adding to the shortage of qualified employees is the fact that Japan mostly sells order-made software as opposed to software products. They sell about 2.5 times more custom software than the US. The largest category of Japan’s annual software sales, it turns out, is also more skill and labor intensive. The demand for intimate collaboration to create custom software is only likely to increase as Japan deals with their increasing need for qualified software engineers. In this situation, Remote In-sourcing can be one of the best strategies for Japanese companies that face huge talent shortage, yet require (and prefer) close collaboration with their software teams.
Order-made software also requires very specific expertise that is sometimes hard to find especially amidst rising talent demands. Seeing as the top three Japanese industries that contract out their software are manufacturing (21%), finance (18%), and information services (13%), finding the right people with the correct set of skills becomes even harder.
What can companies do about it?
With the availability of improved virtual communication working on software can now easily be done remotely. Many companies have begun to recognize that outsourcing can be beneficial and already 8% of Asia Pacific companies have started to conduct their talent search outside their country – more than any other place in the world. Looking abroad is one possible solution, and if taken CEOs should definitely pay attention to the kind of outsourcing model they require.
Furthermore, compared to the rest of the world, Japanese CEOs prefer candidates that are fast learners and have a high degree of technical knowledge (according to Economist Intelligence Unit). Many countries offer outsourcing services, but it is imperative to pay attention to whether a vendor can offer highly technical workforce. For example, on the opposite side of the world, Eastern Europe offers a booming talent pool of highly educated and experienced IT talent and the new Intetics representative office in Japan is more than ready to help Japanese companies with their talent search.
What do you think is the single most important cause for Japanese talent shortage?
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