Facebook EmaiInACirclel
IT Outsourcing

Pentalog in Japanese

Sophie Lelarge
Sophie Lelarge
Chief Revenue Officer

As Alex already mentioned a little while ago in this article, Pentalog is beginning its conquest of the Japanese market in order to develop its client portfolio in Asia. Thus, it wishes to take advantage of its Vietnamese office whose production has now reached a certain level of maturity after two years of experiences on complex project platforms for European customers.Since then, we have started specific operations: market analysis, active involvement on Japanese social networks, contacting and discussing with different professionals, adapting marketing materials in Japanese etc. As far as I am concerned, I had a lot of discussions with people who have experience on this market. The observations that I have made are rather convergent:As regards the market, despite the ongoing crisis which brought about a decrease by 7.6% in offshore services in 2009, the volume is still considerable, reaching 8.6 billion dollars (~10% of the total volume of the Japanese IT market). Application development, maintenance and migration, BPO, embedded technologies and infrastructure and hosting services are some of the main outsourced services. China is undeniably the most important offshoring destination for Japan, holding a 50% market share, thus surpassing India, the Philippines or even Vietnam. Nevertheless, this dependence on China urges Japanese companies to look more and more for an alternative called the “China + 1” strategy. This new strategy provides Vietnam with an extraordinary opportunity, but also with a competition challenge with other low-cost countries (the Philippines, Indonesia etc.).The Japanese offshore market, resembling “conservative” markets like France, is still too weak as compared to the overall market. Embedded activities are particularly difficult to outsource due to the risk of losing control over technologies. However, the lack of resources will compel the government to review their policy in the near future, which is yet another good news for Vietnam 😉 .The Japanese also have a particular kind of decision-making process. From a cultural perspective, any cooperation must be based on long-term confidence, which is difficult to obtain rapidly (unlike in Western countries where it is possible to sign contracts in less than three months); on the other hand, former employees (senior consultants) are highly sought after for helping their former companies choose the right provider.Although well ranked, holding numerous advantages, Vietnam has to meet challenges that are pretty much the same as for its other customer countries (including France where Pentalog Vietnam has acquired a great deal of experience):- Plentiful resources, but a lack of business expertise- Good developers, but a lack of good project managers- A lack of Japanese speakers- A low level of productivity, compared to Japanese levels. According to a study published several years ago, when working with a Vietnamese provider one had to double the estimation made for a Japanese provider. Of course, in the meantime the situation has changed.All of this confirms Pentalog’s interest in opening an office in Japan. But we now have better knowledge as to the approach we are going to use. A large network of acquaintances made through recommendations and a “senior consultant” local manager are vital. We are soon going to make a trip to Japan in order to identify the right people. As regards the rest of the issues mentioned above, we are confident in our model which has already been proven in Eastern Europe and Vietnam:- Strong emphasis on learning the language/culture of our customers- Investing in project management and quality assurance training- Metrics/bonus system allowing to monitor the performance of our employees and help them make constant improvement.To be continued 😉

Leave a Reply

Your email address will not be published. Required fields are marked *