Software Outsourcing: Lack of skills throws a spanner in the works for Japan

Outsourcing in Japan traditionally carried a different meaning from its globally accepted definition. Even though Japan has been a player in this field for a long time, products and services were usually outsourced to a single service provider. However, there has been a sea change in Japanese perceptions towards outsourcing, and companies have started moving towards the universal model, in particular, with regard to software outsourcing.

Outsourcing software and related services is a major stage in the whole chain of operations, for this technological giant. For the country that had rolled out the latest in industrial and technological marvels, this is big business that comes at a cheaper cost. However, realizing these targets would require the latest in software skills and technical expertise. This is one area where Japanese companies are facing stumbling blocks on their road to hi-tech but cheaper software.

Non-skilled workforce is an impediment to offshoring

Countries like Japan are attracted to developing nations such as India, China, Vietnam, and Philippines, mainly because of their vast reserve of huge human resources and cheap labor.

On the other hand, a large workforce will not necessarily have the sought-after skills and knowledge required to work in a BPO company that deals with software and related services. Such is the case of Vietnam that has huge potential due to its large base of human resources but not sufficient skilled and trained workers.

Vietnam IT company. Image source

As far as Vietnam is concerned, Japan is a major harbinger of software business. For example, Japanese companies contribute to about 35% of the market turnover in Vietnam.

The Vietnam industry achieved $20 billion as revenue in 2011. Yet, software contributed to only $1.2 billion. There are about 80,000 programmers working for a total of 15,000 software companies in Vietnam.

Companies in Vietnam are finding it tough to meet the increasing demands of the software outsourcing industry in Japan. A large percentage of the workforce does not possess university degrees. Hence they have to be trained to meet the increasing demand for software professionals from Japanese BPOs.

A company Nissan Techno Viet Nam that works with Nissan, the Japanese carmaker, had to spend three years alone in training their employees in the English and Japanese languages, in addition to driving. All these point out to the drastic need for developing a base for skilled professionals in Vietnam. Otherwise, Japanese companies will have to start looking elsewhere to fulfill their software requirements.

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