Offshore Development Adoption Is Becoming a Trend in Japan

1. Demand for offshore services is growing worldwide and in Japan.

• According to a survey by IPA (Information-technology Promotion Agency), 45.6% of Japanese companies currently use offshore services. This figure is expected to rise further in the future.
• The trend of using outsourcing has been spreading since 2017 and became extremely popular from 2021. In 2020, the offshore market size reached $4 billion, and it is projected to grow 2.5 times by 2023.

Global offshore market size (USD), 2017-2023

* Source: Statista 2020 : https://www.cmcglobal.com.vn/trends/global-it-outsourcing-market-report-2021/

2. Vietnam ranks No.1 in Japan's offshore market.

According to the 2021 Offshore Development White Paper, Vietnam has become the most popular offshore destination, holding the No.1 position with a 52% share.

Link: https://www.offshore-kaihatsu.com/news/articles/white-paper-2021/

3. Why is Vietnam offshore so popular?

There are various reasons for this.

3.1. Ability to thoroughly solve talent shortages

In the Japanese market, where IT talent is scarce, companies can easily gather excellent talent through offshore development without needing to hire locally. Vietnam has abundant IT talent, with a large number of young IT professionals graduating every year.

3.2. Significant cost reduction – 50% or more

Compared to a team of 10 Japanese staff, an offshore team of equivalent scale would consist of one Japanese staff member and 10 foreign staff members. This can reduce costs by around 50%. The larger the team size, the greater the cost savings.

*Source: Compiled by Miichisoft.

3.3. The quality of Vietnamese IT talent is steadily improving.

Many IT professionals hold JLPT N3 or N2 certification. In addition, IT is currently the top major, with the highest university entrance exam scores. Since many graduates come from top universities such as Hanoi University of Science and Technology and FPT University, many companies are eager to hire them.

3.4. Ability to leverage technology and know-how.

With the spread of the internet, more than half of Vietnam's young population can acquire knowledge of the latest technologies. This makes it possible to secure excellent talent without spending time or money on training, enabling the development of a wide variety of systems.

With the characteristics above, it becomes easy to understand why offshore development has become a trend.

*** Offshore development is currently very popular, and Vietnam offshore in particular ranks No.1.

In 2020, amid the global spread of the novel coronavirus (COVID-19), there was a major shift in how Japanese companies positioned offshore development.

In our next email, we will guide you through the detailed process of adopting offshore development in Japan.

If you would like more detailed information, please feel free to contact us.

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