Japan beckons local code writers

The Japanese market, hitherto rather closed, could soon open up for Indian IT services firms.

“We are creating an operating system between our two nations. It is in its final stages. This is necessary to address various concerns that industry, especially IT industry has, regarding our both countries. We are keen to do this at the earliest,” Haraguchi Kazuhiro, the Japanese minister for internal affairs and communications, said at a ceremony at Aamby Valley near Mumbai.

“Last month, our Prime Minister met Indian Prime Minister Mr Manmohan Singh in New Delhi and signed several joint collaborations. Now that I am here with this delegation to follow those up shows how seriously and quick are things going to happen,” Kazuhiro said.

The minister is leading a 25-member Japanese delegation to the country.

The delegation includes the CEOs of firms such as NTT Docomo, KDDI Corp, Kyocera Corp and Softbank Mobile Corp.

Japan’s $3 billion worth of annual IT services outsourcing forms just 3% of its total IT services market.

Local IT players have long been complaining about Japan being an orthodox market and closed to outsourcing.

“Japanese firms work in their own way. They do not prefer outsourcing. They still maintain a lot of legacy systems on which skill set availability becomes an issue. Japanese prefer less documentation, which makes service level agreements difficult. Besides, they prefer local service providers,” Girish Wardadkar, president and executive director of KPIT Cummins, a firm which provides IT services to Japanese firms such as NEC, Fujitsu etc.
But nobody doubts the huge potential of this market.

“Japan is the second-largest IT services market. We estimate that by 2020 India will export about $175-225 billion worth of IT services. However, if Japan market opens up, that size is going to be much bigger,” said Nasscom vice chairman Harsh Manglik, who is also the chairman for Accenture India.

As a part of confidence building measures, Japan will participate in the Delhi Mumbai Industrial Corridor (DMIC).

“We shall use DMIC to put some concrete actions in place. We shall also be actively involved in Aamby Valley,” Kazuhiro said.
At the same time, Japan is looking to increase its investments in India.

In 2008, the country had invested about $8 billion in India and “that is going to increase significantly now,” Yamazaki Yasuyo, advisor for Japan’s ministry of internal affairs and communications, said. “The last government invested mostly in US and Europe. We shall now focus on investing more from our 140 trillion yen asset of pension fund into India.”