Many in Japan Are Outsourcing Themselves

In October 2008, when the world was reeling from the collapse of Lehman Brothers and job markets were freezing up everywhere, Akane Natori waltzed into a new position she liked. “Things went so smoothly after applying online, and before I knew it, I had the job,” said Ms. Natori, who was then a 26-year-old sales assistant at an import-export company in Tokyo.

There was just one catch, one that speaks volumes about the Japanese economy and the challenges younger Japanese face in a country where college graduates used to count on lifetime employment with the company they joined right out of school. Ms. Natori’s new job — working in a call center answering queries from customers in Japan — was in Bangkok.

Japanese job fair
Toru Yamanaka | AFP | Getty Images
Japanese job fair

Under fierce pressure to cut costs, large Japanese companies are increasingly outsourcing and sending white-collar operations to China and Southeast Asia, where doing business costs less than in Japan. But while many American companies have been content to transfer work to, say, an Indian outsourcing company staffed with English-speaking Indians, Japanese companies are taking a different tack. Japanese outsourcers are hiring Japanese workers to do the jobs overseas — and paying them considerably less than if they were working in Japan.

Japanese outsourcers like Transcosmos and Masterpiece have set up call centers, data-entry offices and technical support operations staffed by Japanese workers in cities like Bangkok, Beijing, Hong Kong and Taipei.

Such outposts cater to Japanese employers who say they cannot do without Japanese workers for reasons of language and culture. Even foreign citizens with a good command of the Japanese language, they say, may not be equipped with a sufficiently nuanced understanding of the manners and politesse that Japanese customers often demand.

“If you used Japanese-speaking Chinese, for example, the service quality does not match up with the expectations of the end customers,” said Tatsuhito Muramatsu, managing director at Ms. Natori’s employer, Transcosmos Thailand, a unit of Transcosmos, which is based in Tokyo.

Statistics on exactly how many Japanese have taken jobs outside the country at lower wages are hard to come by. But according to the Japanese Ministry of Internal Affairs and Communications, there was a net outflow of 100,000 Japanese in the year that ended in September 2008, the most recent for which statistics were available. It was the highest number in the past 20 years.

While the number of workers sent overseas by Japanese companies on traditional expatriate packages fell 0.32 percent in the same period, the number of “independent businesspeople” and freelance contractors like Ms. Natori rose 5.69 percent, according to data from the Japanese Foreign Ministry. Many of those workers were headed to cities like Shanghai and Bangkok, where net increases of Japanese residents have been recorded in the past several years, according to the ministry.

Many large Asian cities — including Bangkok, Hong Kong, Jakarta, New Delhi, Shanghai and Singapore — have three to four Japanese job placement agencies each. Four Japanese outsourcing companies run call centers in Bangkok, which is a particularly attractive city for such operations because it has low costs but good amenities, offering a living standard that young Japanese enjoy.

Transcosmos runs the largest Japanese call center in Bangkok, having nearly tripled its staff from 60 workers in late 2008 to 170 now. “We see ourselves growing to as large as 500 workers here,” Mr. Muramatsu said.

Transcosmos pays a call center operator in Thailand a starting salary of about 30,000 baht, or $930, a month — less than half of the ¥220,000, or $2,500, the same employee would get in Tokyo. That means a saving of 30 percent to 40 percent for customers, Transcosmos said.

Masterpiece, another Japanese outsourcer, has operations in Bangkok, Beijing and Dalian, China. Its workers handle jobs like mail-order service requests, processing of time sheets and other salary paperwork, and following up on e-mail inquiries. The company has Japanese and Chinese employees, and according to its Web site it is hiring people to establish another call center, in the Philippines.

Japan lost 240,000 jobs in May, government statistics showed, bringing the seasonally adjusted number of people with work to a two-decade low. The unemployment rate rose to 5.2 percent. Although exports have picked up since the end of 2009, economic growth remains slow. Gross domestic product expanded 1.2 percent in the first three months of 2010 from the level in previous quarter.

At home or abroad?

“Overcapacity and excessive competition haunt domestic Japanese industries that are battling for a shrinking economic pie,” said Takumi Fujinami, senior economist at the Japan Research Institute, a research organization affiliated with Sumitomo Mitsui Bank. “That exerts perennial pressures to reduce costs. Japanese companies can’t cut off existing employees on the lifetime roster, so they are squeezing the younger workers ever more tightly.”

Some overseas Japanese workers, like Ms. Natori, are not unhappy with their jobs, despite the low salaries. They say their lives abroad have given them a new sense of liberty.

Ms. Natori, who was recently promoted from call operator to a supervisory position, said she saved more money in Thailand than she would in Japan.

“If you are willing to live off local Thai restaurants, you spend only 30 baht for rice with eggs, vegetables and meat,” she said. “My rent currently is only 6,000 baht, and utilities are at most an additional 500.” She lives in a roomy studio in a condominium in central Bangkok with security and a swimming pool that is open 24 hours. Life is better in Thailand, she said, because she is free from some of the social and workplace pressures that ate into her private life in Japan. “The moment you step outside, you are in a foreign country here,” she said. “That allows me to have separate workplace and private lives. I am actually able to concentrate on work better because of the clear separation.”

Ms. Natori said her parents and friends often visited her in Bangkok, so she did not miss Japan too much, nor did she have a definite timetable to return home.

Misuzu Yara, 34, realized in early 2008 that job opportunities in Japan, especially in her native Okinawa, far from the Japanese main island, were diminishing. So when an acquaintance at Tempstaff invited her to join the new division in Jakarta as a local hire, she agreed.

“The salary as a local hire in Indonesia wasn’t very different from what you’d get in Okinawa, actually,” she said. “Considering how important Asia is going to be for Japan, I figured it would be a good opportunity.”

Now, she helps find jobs for Japanese workers in Indonesia. Japanese companies in Indonesia generally offer Japanese local hires minimum take-home pay of $1,500 a month, plus a vehicle and sometimes housing.

“The number of inquiries grew markedly during 2008-2009 from young Japanese workers who had difficulty finding jobs in Japan,” she said.

But local hires do not have the same sense of job security as workers in Japan do, Ms. Yara said. “There is a sense that each and every moment at your job determines your chances of keeping it.”

While Transcosmos executives recognize that some Japanese have sought work in Thailand because they could not find employment at home, they say that the job performance of their Thai-based operators is superior to that of counterparts in Japan.

“It is possible that workers in Thailand are able to perform well because they have fewer things to worry about in life,” said Hiroyuki Uchimura, general manager of business process outsourcing services at Transcosmos in Tokyo.

With the Japanese population aging and shrinking and more Japanese companies seeking avenues of growth overseas, job opportunities for Japanese abroad are likely to grow, said Kazuyuki Ichikawa, chief operating officer of Pasona Global, which helps its clients find Japanese workers overseas.

While Japanese companies could save even more if they hired only locals overseas — some experts say locals could be hired at half the cost — the preference for Japanese nationals is likely to endure, Mr. Ichikawa said.

“You say one thing and Japanese employees will understand three things,” he said. “In Western cultures, you might be straightforward with what you want your staff to know, but a Japanese manager would want you to understand it without having to say it.”