Offshore IT Outsourcing The Japanese Perspective by nfk14697


									Offshore IT Outsourcing:
 The Japanese Perspective

             WITSA Public Policy Meeting
                   Hanoi, Vietnam
                 November 26, 2003
    Trends in Japanese Offshore
Japan is increasing its offshore efforts:
   Sustained competitive pressure from international
    companies continues to drive outsourcing efforts
   Our most significant outsource destinations remain
    China, Korea and India
   The bulk of work being outsourced is made up of
    labor intense downstream design and coding for
    software development projects
   We still have yet to see significant offshore
    outsourcing of back office functions
         The Main Challenges
Although the market for offshore outsourcing is
  continuing to expand, several main issues impede
  its pace:
    Japan is hampered by a shortage of experienced CIO-level
     professionals, especially in government. Many projects
     start without appropriate prior consultation work, leading
     to specifications changing during the course of the project.
    Linguistic problems often arise, and translation adds
     additional costs and complications.
    Differences in business culture, especially surrounding
     contract interpretation.
    Difficulties in foreign engineers obtaining work visas.
       Government and Industry
Though facing many challenges, both government and
  industry are strongly behind efforts to increase
  offshore outsourcing:
   Driven by the desire to decrease infrastructure TCO in high-
    priced Japan, industry groups are pushing hard to systemize
    their efforts and bring economies of scale to utilize foreign
    outsourcing resources.
   Smaller domestic IT services companies continue to be unable to
    take advantage of the cost savings from offshore outsourcing, so
    still must team up with larger companies, adding a layer of cost.
   Led by METI, the Japanese government is taking steps to
    increase the overall IT educational infrastructure, particularly in
    project management, to provide the skills in Japan necessary to
    take advantage of increased outsourcing.
   Due to the high demand for bilingual engineers in offshore
    countries, many companies have to deal with a high rate of
    employee attrition. Besides the obvious disruptions this causes
    to projects, theft of intellectual property also becomes a concern.
                  Future Vision
Japan feels that preserving a free and unfettered
  atmosphere for offshore outsourcing is essential for
  strengthening both the domestic and regional ICT
    In order to strengthen competitiveness and reduce costs,
     offshore outsourcing will continue to increase in importance.
     Gradual utilization of both foreign professionals for high-
     level consultation and peripheral service BPO will
     undoubtedly increase.
    Outsourcing to less developed countries will help speed
     skills transfer and strengthen the Asian region as a whole.
    Building upon our experiences in offshore outsourcing of
     manufacturing, Japan feels that the overall benefits
     increased offshore outsourcing for our economy will
     outweigh any temporary need for workforce restructuring.
Thank you for your time

        Mark Schikowsky
      Manager, International
       Argo 21 Corporation

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