Land of the Rising Sun

Take a close look at these facts: Jobs have just dried up. Despairing
messages on the immigrant support network forum-seeking help from body shoppers,
who have shifted techies to the US but have not placed them, abound. The
slowdown in the US has caused jitters in the job market. The global economic
giant no more is the most sought after destination for aspiring professionals.
Why only professionals, the software companies have begun to look at Japan as
the next destination for setting up their operations.

Fact-speak

Japan has always been the second largest market in the world after US for
software and services. The estimated size is close to $ 100 billion. According
to Y Sato, chairman Japanese IT Services Industry Association, more than 50
companies have entered the Japanese market as of now. This number is almost ten
times what it was a decade ago. Some of the IT majors who have Japanese clients
include Datamatics, IBM Global Services, Polaris, and Wipro.

DEFYING TRENDS: The IT services industry in Japan is growing steadily, even as the global economy continues to stumble along

The estimated annual IT spend of Japan is around $70-80 billion making it the
second largest in this space as well after the US. In 2000, Indian software
exports to US stood well over 60 % while it was just a little more than three
percent to Japan.

The numbers since then have hardly improved with last year’s exports to
Japan at a mere $ 150 million.

"Japan’s IT spend stands at 17 % of the world’s total spend on IT
and India’s share is less than one percent of that market," says Vivek
Singhal, Chairman, Electronics and Computer Software Export Promotion Council.
Some of the exporters include Tata Consultancy Services (TCS), Zensar
Technologies, Network Systems & Technologies, Infosys, L&T Infotech.

Tokyo via Pune…

As the country talks about Japan being the next IT destination, it is Western India that is fast gearing up to meet the Japanese challenge

Today, Pune boasts of the largest Japanese speaking students in the country with 2000-odd students attempting to master this language either through private tutors or the University’s Department of Foreign Languages. The Indo-Japanese association here prepares students for proficiency tests. Once the students pass this examination, they become eligible for jobs as either translators or interpreters. Software professionals, however, are seriously viewing the language as an entry point to plum positions in Japanese firms. Says Uma Gokhale, member of the Indo-Japanese association, "What began as an effort to culturally link the two countries in 1971, is now turning out to be a serious business effort." "The requirement of the Japanese industry is huge. More than 3 lakh professionals are required in our country in a span of 2 years", says Kanji Ohashi, CEO, i-POC. The company has formed a joint venture with Pune-based Seed Infotech to train Indians in information technology skills along with the Japanese language. The newly formed Information Technology Professionals College (ITPC) in Seed Infotech will send 150 professionals to Japan and subsequently, upto 500 professionals are expected to be trained and placed in Japan. Ohashi was quite upbeat about the venture and said they had zeroed in onto Pune because of the huge pool of IT talent and the large mass of Japanese speaking students. Narendra Barhate, director and CEO, Seed Infotech was optimistic of reaching out to the Japanese markets through this alliance with i-POC. Under this cooperation, Seed Infotech will conduct training in India for IT professionals. Apart from the IT education course, the stress would be on a short-term basic course in Japanese. This would give the students entry into the IT Professionals College (ITPC)- the new venture between the two companies wherein the students not only get to learn the Japanese language, but also receive training in Japanese business practices and culture. On completion of the two month course, a student will be placed in a Japanese company through i-POC. Candidates begin as software developers and move up the ladder to become systems analysts. This activity is expected to open another avenue of offshore development in India. The work on prototype projects has already started at Zensoft India, a % subsidiary of Seed Infotech. Depending on the response, they hope to start franchisees in other cities like Bangalore. The company is looking forward to achieve a turnover of Rs 20 crore from the ITPC in three years if the idea of franchisees takes off. Barhate also hopes to cash in on the opportunity of conducting corporate training for interested companies.

Nanda Kasabe/CNS in Pune

Till now only 30-40 Indian companies have a presence in the country. Although
Indian companies did undertake substantial work during the Y2K boom, they could
not leverage on that exposure subsequently.

Today the opportunity for Indian companies exists in developing telecom
software and providing software services to Japanese companies. "Software
services is particularly attractive for India. The Japanese are conservative by
nature and thus prefer customized solution," says Sunil Mehta, VP Research,
Nasscom.

According to the figures of the Japanese Ministry of Economy, Trade and
Industry (METI) published in August 2001, custom software development makes up
53 % of total sales. Japanese corporate users prefer custom software to software
products because they want to maintain their own corporate culture. Information
processing service accounts for 17 % with software product sales at 8 %.

The embedded software, chip designing and IT-enabled services market also
provide a big opportunity. Japanese companies are actively exploring the
possibility of outsourcing IT projects to India. The Japanese government has
also sought to ease visa and immigration laws to help Indian software
professionals. It is in the process of formulating facilities on the lines of
H1-B visa. By 2003, Japan expects to give visas to 30,000 software professionals
of which 6,000 would be Indian software professionals.

Doing business in Tokyo

Although there is considerable awareness about the potential in Japan, there
are entry barriers like language and culture. The Japanese market is a lot more
conservative than US and the maturity cycle of projects may be much longer. But
once a deal matures, chances are, there could be long-term relationships.

Setting up a business in Japan may not be as simple as it seems to be. The
Indian IT companies follow the flat hierarchy similar to that of the Western
countries. "Most Indian software company CEOs agree that the Japanese
culture is not as open as the US culture", views Tarun Bali of ABC
Consultants. An understanding of how business in Japan works and the knowledge
of Japanese language and customs increase the possibility of breaking the ice
also heightens. "Also, once established, relationships in the Japanese
market tend to be more long-term and less price sensitive than that of the US
market", he adds.

"Any organization attempting to enter into the market should plan for
the long haul. Once you break through, there are opportunities to build long and
mutually rewarding relationships", says N Venu Gopal, CEO and co-founder,
Aithent Technologies, echoing Bali’s views. Japanese look forward to an
organization’s commitment to making it big in a market. The steps that one
takes to establish oneself in the marketplace will be scrutinized.

Japanese have an eye for detail and have high quality standards. It is
imperative for Indian companies to first establish their business credentials
before striking any substantial business deal in the market.

According to Rajan Bhatnagar, CEO, Jobcurry Systems, an IT recruitment
company, Japanese have a strong sense of "one’s place" in the
hierarchical distinctions of rank. Behavior in Japan is mainly situational and
is not determined by a universally applicable set of standards. They are
subjective and experiential in their thinking, sticking to traditional values.
"Since they tend to be more subjective than objective, the Japanese as a
people rely far more on their feelings than on facts," adds the site, which
gives recruitment tips as well as interview tips for aspiring professionals
wishing to take up suitable positions in that country.

Talk, walk Japanese

Talking about Indian IT Professionals, Sato predicts that by 2003, more than
6000 Indian software professionals will be working on projects for Japanese
companies. Echoing Sato’s views is Kanji Ohashi, CEO, I-POC, "The
requirement of the Japanese industry is huge. More than three lakh professionals
will be required in the next two years. We, at I-POC plan to send 150
professionals to Japan in 2001-02 followed by 250 and 500 in the following
years".

However, at the same time, most of the Indian professionals find it difficult
to adjust to the Japanese culture. "Most Indians who go to Japan are quite
unfamiliar with the landscape there and find it difficult to interact with
people", says Michiko Tendulkar, Pune-based Japanese teacher who has her
own private institute that undertakes specialized training for corporates.

The industry has taken a number of initiatives to train Indian professionals
in Japanese. Nasscom with the Alumni of Oriental Technical Studies has set up an
institute in Bhubaneswar and MIT with the Japanese Government plans to set up an
Institute at IIT Lucknow shortly. Dotcoms like Indiainfo.com have also started
offering offline languages classes in Japanese.

Outlining the other practical difficulties Indian professionals face in
Japan, Sato says that the scarcity of vegetarian food and the high living costs
are also some of the problems faced by people who are keen to settle down in
Japan. But these turn dinky if one is looking beyond the Silicon Valley.

STICKING TO TRADITION: Typical Japanese corporates prefer to go in for customized software, not out-of-the-box solutions. This is because they want to keep their own corporate culture intact.

A major deterrent for closer working relations with the country is the
withholding tax in the absence of a treaty which avoids double taxation. This
makes exporting software to Japan unattractive as compared to other countries
with which we have a treaty in place.

Analysts recommend that the best way to enter this part of the world would be
to be embedded in Japanese culture by way of local presence through a joint
venture or merger and acquisition. Indian corporates could also look at
penetrating the market through different kinds of alliances like partnerships in
system integration, project implementation or on a deal-to-deal basis.

If the facts and figures are any indicator of the future, then it is the
right time for the Indian IT industry to say sayonara to the United States and
shake hands with the Japanese!

S Lakshmi and Balaka Barua Aggarwal
in New Delhi

<

Perfect for Perfectionists

Vipin Tyagi is the president and CEO of Network Programs, founded by a group
of Bell Labs and Bellcore personnel. It has offices in Australia, Israel, India,
the US and the UK, and launched its operations in Japan in 1995. In an
interview, Tyagi outlines what Japan offers Indian IT companies and
professionals

How much of your company’s business comes from Japan?

Close to 49% of our revenues come from Japan.

When did you begin operations in Japan?

In 1995, we opened an office in Ginza, Tokyo’s prime business district. We
have six employees there, including some Japanese nationals. We also have a
large reseller and channel network there.

Which are the areas where Indian IT companies can contribute to Japan?

Japanese companies have not been very successful on the software front. The
edge we provide to Japanese companies, is in the area of software development.
Resources from India, innovation in the US and deployment in Japan–that’s
the best combination for success. In terms of technology, the potential lies in
the areas of embedded software, IP version 6 and software services in general.
Indian enterprises have to create their own core competencies. Or else, they
cannot move on as solution providers.

Which are the services that are in demand currently?

The Japanese are looking for network oriented equipment, telecom IP oriented
software and enterprise applications. CRM is another important area. In fact,
17% of IT spending in Japan is on CRM.

What are the IT skills that Japanese companies are looking for?

Once again skills pertaining to embedded systems, realtime OSs, the C language,
chip oriented systems, Java, XML and the creation of new systems. Domain
knowledge, especially in the area of telecom, is valued a great deal.

What are the challenges for Indian IT professionals in Japan?

The competition in Japan comes from Chinese professionals. They can read the
Japanese-like script and are culturally closer to the Japanese. Being able to
speak Japanese is certainly an advantage. Japanese professionals themselves are
extremely hardworking. They take immense pride in their work and are keen on
setting examples. However, they do have a problem speaking in English. It is
important for Indian professionals to match the quality of work ensured by their
co-workers.

What do Indian companies need to keep in mind while doing business with
the Japanese?

While working with the Japanese, one needs to be patient. It takes time and
a little working with clarity in order to understand what the client actually
wants. A Japanese client will not state his requirements up front. But the
issues will gradually become clear to you through a process of dialogue.
Professional relationships are ultimately built by sharing. Teamwork, effective
presentation of ideas and communication are extremely important.

It is a perfectionist society. It is almost mandatory for the next job to
better the last. There is tremendous focus on detail.

The work culture is quite different and you will often find business
discussions happening outside the office set-up-like in a public bath or over a
few drinks. Besides, the Japanese usually refrain from criticism. In fact, they
don’t ever say ‘No’ to anything! So even when there is something a
business associate has not liked, you need to figure it out. You need to be
perceptive enough to pick up cues from unwritten or even non-verbal
communication.

What are the soft skills the Japanese are looking for?

Honesty with your work, sincerity and commitment are valued, in fact
expected. There is a very strong sense of work ethic. It is understood that any
commitment, on paper, via e-mail or even verbal, will be fulfilled. Litigation
therefore, is uncommon. The ultimate goal for a Japanese enterprise is clearly–satisfying
the end customer. Companies ensure that they will never go back on a commitment,
even if it means bleeding finances. Typically, the scenario is that software is
provided by Indian companies and is sold after value additions from Japan. Given
the focus on the end customer, there are occasions when Japanese companies
demand services or value additions even when they are not mentioned in the
contract.

The work culture in Japanese companies is oriented towards improvement.
Better quality systems are rewarded and this motivates you to be more honest. It
takes a little while to break the ice. But once you prove that you are committed
to work, people start respecting you. There is absolutely no racial
discrimination. In fact, unlike some of the Western countries where Indian
companies operate, the Japanese have no ego problems with reporting to an Indian
boss. It is a polished environment and people are usually formally dressed at
the work place. It is best to blend in with the crowd and maintain harmony at
the workplace.

What are the remuneration packages like?

Salaries are generally fixed according to the professionals’ role in the
project. A Japanese company would not alter the salary level for a person with
generic skills. But for people with a high level of experience and sound domain
knowledge, it would be prepared to pay more. Besides, Japan has suddenly woken
up to the advantages of working with Indian IT professionals.

And this may just be the time to take up an assignment in Japan.

Manjiri Kalghatgi in New Delhi