December 10, 2021 TOPICS

Will Asia be the Wellspring for Work-ready Talent? Highly-skilled IT Talent is the Key to the Growth of Japanese Companies

In the fourth industrial revolution, the cultivation of IT personnel who will be responsible for the development of AI and IoT has become an important issue for the economic development of each country. Competition for these highly-skilled human resources is intensifying around the world, and securing such human resources is an urgent issue for the future growth of Japanese companies. We interviewed Professor Takashi Moriya of the College of Business Administration at Ritsumeikan University, who is an expert on the growing presence of highly-skilled human resources in the Asian region.

[Key Points of this Article]
● Japan's educational structure makes it difficult to train large numbers of IT personnel
● India's IT human resources have grown rapidly since Y2K
● The establishment of international certifications has encouraged the globalization of human resources
● The importance of "referral hiring," where talent attracts talent
● Some people like anime and manga so much they seek employment in Japan

Why is there a shortage of highly-skilled IT personnel in Japan?

First of all, let's look at why there is such a major shortage of IT personnel in Japan. Professor Moriya points out the structural problems in Japanese higher education that contribute to this issue:

“Basically, the Japanese university system is divided into liberal arts and hard sciences, and the sciences are further subdivided into fields like information science and engineering. Highly-skilled IT personnel are those people who have studied at graduate schools in the field of information technology, so their population is small.
Moreover, even if we wanted to reform the structure of undergraduate colleges to promote human resource development, this could not be done overnight due to complicated accreditation issues. It is only recently that Japan has seen the establishment of new computer and information departments and information science colleges, but it takes six to eight years before the students who study there become high-level IT professionals. That is too late.
In other words, it is no longer realistic to secure these kinds of human resources from within Japan.”

The digital transformation (DX) is currently making strides in various industries, and work-ready IT personnel who can perform at the front lines are needed, but there are not enough of them. First of all, it is necessary to understand the situation.

The presence of Asian IT talent centered on India

Professor Takashi Moriya, College of Business Administration, Ritsumeikan University

Professor Moriya is also the research leader of the Asia Pacific Institute of Research's India/Asia Human Resource Utilization Study Group, and he is an expert on human resources development in India, Vietnam, and Singapore. What are the strengths of these countries?

“The United States is by far the most advanced country in the tech sector. About 20 years ago, the world faced the Y2K problem. We had to deal with various problems caused by the change in the number of digits in various systems.
So, at that time, the U.S. placed ordered a considerable amount of tech services from India. After that, India started taking on a large amount of work for Microsoft, Google, and others. Today, India is one of the leading IT production and development centers in the world,” explains Professor Moriya.

So, how did India achieve such a rapid rise as an IT powerhouse? One of the reasons behind this is the international certification of qualifications and skills.

“In the world of computer science, the U.K.-based system is often used for international certification. There are also strong international certification schemes in India as well as countries like Malaysia and Australia. Of course, one aspect these countries share is English as a common language, but it is also important for workers to have a background that allows them to tackle jobs immediately even when working with different countries,” says Professor Moriya.

If you study and acquire advanced skills in India, you can work in the U.S. right away. Moreover, the compensation at IT companies in the U.S. is extremely high. This is the context in which India has produced so many IT professionals.

The globe-spanning personal networks of highly-skilled talent

Highly-skilled IT professionals have more opportunities to work anywhere in the world regardless of distance or national borders. On the other hand, Professor Moriya points out that their "connections" are more "human" rather than digital.

“In the U.S., top-level positions at the big four tech companies (GAFA: Google, Amazon, Facebook, Apple) are occupied by people from India, and the number two positions at mega-venture companies are also increasingly occupied by people from India. The reason for this is not only their high level of IT skills, but also their personal networks.
They are connected with other talented people who also have advanced IT skills, and they usually have a network with their own countrymen. Putting Indian talent in the upper echelons of a company can be seen as a strategy to utilize their deep networks to attract high-level IT talent.
Similarly, China has an abundance of IT talent, but China is beginning to lock down that talent for its own IT companies such as Baidu and Alibaba. India is open about IT, so the market for Indian talent is open to Japan as well. It has been the government's intention in recent years to create a win-win relationship between Japan and India by inviting Indian talent not only for the tech sector but also for the manufacturing sector,” explains Professor Moriya.

What Japanese companies need to do to secure highly-skilled IT talent

Advanced IT skills are fast becoming an "international language," so to speak, so skilled individuals tend to work in higher-paying places. After three to four years, they can take the next step in their career by job-hopping. This is the normal way of working for IT personnel.
Given this situation, how should Japan go about securing human resources?

“The most attractive place for tech workers is of course the United States. For example, a high-level IT professional who joins one of the big four tech companies from the Indian Institute of Technology can earn a starting salary of about ¥30 million. In addition, it is not uncommon to receive hundreds of millions of yen in bonuses if you succeed in an in-house venture. It's obvious why talented people aim to work in the U.S. On the flip side, if you don't produce results in six months to a year, you will be fired immediately. This is why high rewards and risk are two sides of the same coin.
On the other hand, in Japan, there is no such thing as a 'quick fire' personnel policy, so in this respect, it is a kind country. The longer you work, there are fewer opportunities for financial return and growth, which is a disadvantage for career development, however. In the future, how to strike a balance in this area will be the key to success for Japanese companies,” says Professor Moriya.

Do employment timing and referral hiring improve a company’s chance of winning?

So, how can Japanese companies attract high-level IT personnel, for whom competition is intensifying? Professor Moriya explains:

“The recruitment of Indian talent takes place at universities. Companies send out job postings to universities and have about a week’s worth of recruiting days. At top class universities such as the Indian Institute of Technology, major companies such as the big four tech companies secure the cream of the crop on the first day, making it difficult for Japan to recruit good people.
In such a situation, the only way to secure talented people is to recruit them before these recruitment days are held. What is important are the personal networks that I mentioned earlier. It will become more important for companies that already have Indian employees to communicate what makes them appealing and offer internships to the younger and older classmates, friends, and even relatives of those employees. Companies need to be aware of the need for steady ‘referral recruitment’ rather than systematic recruitment.
I also have the impression that there are many people who have decided to work in Japan precisely because they have a strong affinity to Japanese culture such as anime and manga. Conversely, this means it might be difficult to find other strengths of Japan in attracting high-level IT personnel at present.”

Japan's IT industry and the acquisition of human resources appear to be lagging far behind the rest of the world, so despite the obstacles of competing in the global arena, it is essential that Japanese companies make steady efforts in order to move forward. The time has come for Japan to reevaluate the power of people.

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