Japan: The problems facing Japan's IT industry

An entry [ja] by blogger gothedistance translating and introducing passages of the New York Times article High-Tech Japanese, Running Out of Engineers climbed the rankings a few weeks ago to become a popular article [ja] at Hatena bookmarks, Japan's most popular social bookmarking service. The article describes a growing shortage of engineers in Japan resulting from so-called “rikei banare”, or “flight from science”. Young people, the article explains, are more interested nowadays with fields like finance or medicine, or creative careers like the arts, then they are with engineering. While the shortage has been recognized for decades, only recently have companies been starting to feel its consequences, with one estimate putting the shortage of engineers at almost half a million.

Blogger gothedistance generally agrees with the contents of the New York Times article. It would seem that there is a shared recognition of the situation described in the NYT article among most Hatena users (many of whom are said to be programmers and people in IT-related fields), and many comments on the entry expressed agreement and sympathy with the blogger.

Commenter mkusunok, also known as blogger Masanori Kusunoki , writes:


The NYT is impressive. Everything that is written [in this article] is correct, and this something that is so terrible that the Nikkei [a Japanese newspaper] can't write about it.

goyoki comments:


I think the problem is that there are not many posts with good working conditions for older engineers. Engineers-in-chief, fellows and CTOs are generally handled like managers, and I can only imagine that senior programmers over age 50 would be exhausted with this level of halfway treatment.

Some went as far as to express opinions like this one, posted by elm200:

このエントリと直接関係無いけど、まだこうやって日本の記事を書いてくれる New York Times はありがたい。BBC News なんてほぼシカト状態からね。”China” の五文字を見ない日はないのに

No relation with this particular article, but I am really thankful to the New York Times for doing this kind of thing and writing this article. Because BBC mostly just ignores [this issue]. Although not a day goes by without seeing the five letters of “China”.

In his book “Economics of excess and destruction” (過剰と破壊の経済学), blogger Ikeda Nobuo earlier wrote the following about the peculiar “general contractor-style multiple sub-contractor architecture” (ゼネコン型の多重下請け構造) of Japan's IT industry:

(親会社が開発・設計を行い入札で安く請け負う企業に発注するアメリカの企業に対して)トヨタは開発段階から「デザイン・イン」などによって下請けと情報を共有する(中略)。トヨタと下請けを結びつけているのは、アメリカ的な契約でも資本関係でもなく、属人的な長期的関係である。(同書 P128)

(In contrast to American corporations, where the parent company carries out development and design and then places orders with companies contracted cheaply through bidding,) from the development stage onwards Toyota shares information with subcontractors through “Design-In”. […] This connection between Toyota and the subcontractor is neither an American-style contract, nor is it capital ties, but rather is a long-term relationship through personnel. (p. 128)

In his blog, Ikeda Nobuo argues that the root cause of the problem indicated in the New York Times article is to be found in this relationship:


This insular industry structure was established as a result of the system of long-term employment and enterprise unions created after the war, and while such a system is appropriate for certain types of manufacturing industries, it is not suitable for joining together modular technologies based on open platforms.


The SI [System Integrator] industry has become a temp-services industry as a result of the employment practice of excessively protecting only full-time positions. Because of this, no personnel in core departments of the industry have been brought up to understand IT, and since there is no innovation in information systems, young people are losing interest in IT… this vicious circle is rapidly getting worse.

Drawing from an awareness of the issue in his daily life, gothedistance then identifies a structural problem of Japan's IT industry, that “the industry called SIer (System Integrater) is not characterized by IT services, but by the human resources industry.”

In an earlier entry , he explains this in the following way:


Japan's IT businesses have a fragile business model. It is only in Japan that fake contracts with temp agencies go unmentioned in the software [industry], where there should be the greatest demand for quality. The scheme in the 70s-80s, when there was a lack in the absolute number of programmers, of gathering up people and dispatching them to the scene, and the person-month trade model in which the more time you spend, the higher your profits will be, these two factors were like the wheels, leading to the deformed child that we have today. Simply put, it is a scheme of gathering rotten engineers and moving ahead with the work, where rotten engineers and capable engineers are treated as the same “person-month”.

Next, he refers to an article by Matsubara Tomo, introduced by blogger codemaniax :


In the software development business, it is only Japan where a structure of temp agencies has flourished in which no responsibility is bourne for actual results.


Temp business do not contract software development on the basis of actual results, but rather sell the engineers’ time at some rate per month. The most important concern for software companies that are oriented at temp agencies is the person-month unit and people's operation rate; if possible they want to avoid improvements of the developmental process that decrease earnings, as well as avoid technical training that makes use of surplus capital. Quality in particular is regarded as a problem of the technician alone, something about which managers do not have an interest. In the extreme case, this means that time spent picking out a bug buried by a programmer from a temp agency results in an increase in the actual profits of the company.

Elsewhere, in a thread about the NYT article on Slashdot Japan, the following two comments received a score of 5. This one :


To begin with, if it was possible to review the contribution of engineering work and create a system that sets lifetime earnings at the same level as that of general office work or higher, a system that is not swayed by office workers, that improve the situation, wouldn't it?

And this one :


It would seem that with the current trend in politics, [work] in the future will start being entrusted to foreign workers, but if we remain as we are, without accumulating any technology, then wages and technology will flow overseas. That's what I think, but I wonder what will be done to realize this idea.

It seems that there is an irritation that this sense of crisis, which is shared among the younger generation, is not managing to have any significant influence within society.

Translated by Chris Salzberg.


  • I am surprised that the Times article didn’t even explore the problem of how the extremely low level of FDI in Japan is hurting its man sectors of its technology industry.

  • Pingback: Scratchpad

    […] NY Times gets another kudos.  Taku Nakajima on Global Voices  has been translating Japanese discussion of its story ”High-Tech Japanese, […]

  • A.Y.

    I have noticed many problems related to the Japanese IT companies. There was very difficult to find software programming learning course in Japan. People are teaching and learning only MS-office for their skill up.

    Japan is too much depending on Indian and Chinese IT companies. India and China both are enjoying the Japan market. As once the Indian and Chinese company got work in the Japan, they outsource local office of their country, where engineer’s salary is very low. I found in India, many universities still teaching Basic, Cobol in their syllabus. Even they don’t have Window XP in their Lab in India.

    I visited to Chennai and Bangalore also, there I found many companies they have good hardware with pirated software. I visited to many Bangalore’s private educational institute. They claim to teach Java or Visual C++ or AutoCAD in 2 months (daily 2hours Monday to Friday) with total fee 5000 INR (almost 15000 Yen). I approach their labs with the faculty. I found they are using English version of Auto CAD’s latest version. I was so excited and asked to faculty in Japan many of us can’t afford this new version. How much you paid for it in India. He told me it’s 150 INR (almost 450 Yen). This time I came to know it is a pirated AUTO CAD version.

    In Japan you have to pay large fee to learn software. With pirated software we can’t run business in Japan. If there is no low cost software institute in Japan, how can Japanese students learn software?

    I met many small companies IT engineers from the overseas. Many of them are using pirated version or trial version of software to build an application.

    Why Japan is so hungry for automation? This is very tough time in Japan as many Japanese companies are going bankruptcy. Japanese people don’t have money. It is the cost cutting period (節約時代) in Japan, why Japan should waste money for automation. As Japanese company has to buy software license, that money goes to America. They need Indian or Chinese engineer to build an application, that money goes to India or China. What we gain after automation, we have to cut Japanese staff.

    Read this article from this link. Gates warns against reliance on outsourcing.


    June 29, 2005 (IDG News Service) — TOKYO — Companies should not outsource their core business functions and staff, Microsoft Corp. Chairman and Chief Software Architect Bill Gates told a group of Japan’s top businessmen today.
    Gates, who was speaking at the Nippon Keidanren (Japan Business Federation), Japan’s biggest and most influential business group, urged IT companies to beware of outsourcing too much to save costs and to keep their key engineering resources and intellectual property at home.
    “If you rely too much on people in other companies and countries … you are outsourcing your brains, where you are making all the innovation,” he said.
    The need to maintain a competitive edge by investing rather than cost-cutting was a theme that Gates returned to several times in an address to a group of leading Japanese IT and consumer industrialists that included Hajime Sasaki, chairman of NEC Corp., and Tadashi Okamura, chairman of Toshiba Corp., both of whom had front-row seats.
    Too many U.S. companies were cutting their research and development budgets at a time when investment in these areas is needed to cope with an increasingly competitive global market economy, he said.
    At a national level, both the U.S. and Japan need to train more and better engineers if their economies are to stay at the cutting edge of technological innovation, which would create value that helps support both countries’ high standards of living, he said.
    Gates cast the U.S. and Japan as competing in a global market economy that had grown from about 1 billion people 20 years ago to 4 billion people. In this expanded, increasingly competitive economy, India and China are training engineers who are driving their economies forward, yet Japan and the U.S. aren’t keeping up, he said.
    “The number of students in engineering and IT is going down. … Staying ahead means setting a very high bar,” Gates said.

  • […] The year has seen a difficult situation in the IT industry in Japan. A New York Times article explaining how the country is running out of engineers was received positively by bloggers, who expressed concern about the future of IT jobs in Japan. […]

  • […] Tahun 2008 telah menyaksikan situasi sulit dalam industri TI di Jepang. Sebuah artikel New York Times yang menjelaskan bagaimana negara tersebut kehabisan insinyur diterima secara positif oleh para blogger, yang mengungkapkan kepedulian mereka tentang masa depan pekerjaan TI di Jepang. […]

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