Indian IT firms see opportunity in Japan

Monday, 13 December 2004, 20:30 IST
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MUMBAI: A host of Indian IT companies are planning to explore business opportunities in Japan as more and more firms in that country are looking to outsource technology work due to lack of skilled manpower. Japanese companies today are more open to outsourcing IT services due to prevailing tough economic conditions, said a survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI). As much as 75 percent of the survey's respondents are planning to scale-up their presence in Japan, while all survey participants felt that Japanese industries were inclined to outsource ICT work to outside parties. "Japanese companies have been slow to adopt the outsourcing model but have started recognising the significance of off-shoring and are slowly accepting this," said the report. "Japanese companies are aware of Indian IT capabilities in terms of execution of projects and quality processes," it said, noting outsourcing would improve operating efficiency and improve business performance of that country. The survey findings showed Indian companies must have high emphasis on quality and processes, highly skilled workforce and the ability to ensure on-time execution of complex and large projects to make a presence in the Japanese market. Japan is the world's second largest IT market after the US, accounting for nearly 60 percent of the Asia Pacific IT services market. Over 50 Indian companies such as Tata Consultancy Services, Wipro, Infosys Technologies, HCL Technologies, Perot Systems, NIIT and Clarity Technologies already have a presence in the Japanese market. Japan's ICT industry grew at a 7.5 percent annual clip from 1995 to 2000 to become the biggest and fastest growing segment of the nation's economy. The market will be worth 30 trillion yen in 2005 and balloon to 84 trillion yen by 2010. The FICCI report said the IT services market in Japan is estimated at $60 billion a year. Approximately $3 billion is outsourced from abroad. "So now many Japanese companies are aligning themselves with a cost reduction policy, we find this could lead to many outsourcing opportunities," it said. "The local IT companies are not able to meet requirement due to high cost of software development and shortage of skilled personnel. As a result, firms are now more open to outsourcing their IT services to outside parties than before." The report said IT services such as electronic authorisation, Internet data centres, application service provider, e-learning and e-commerce hold great potential for overseas players in Japan. The share of the Indian IT industry's total exports to Japan and other East Asian countries in fiscal 2003-04 was 5.36 percent against 4.44 percent in 2002-03. "There is still a lot of ground to cover because of Indian companies' inability to master the Japanese language. Chinese and South Korean companies have an edge over Indian ones," said the report. It said there was a need to encourage development of Japanese language proficiency among IT professionals and to understand the cultural nuances of doing business in Japan.
Source: IANS
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