Globally, companies in the IT sector continue to struggle to recruit, train, and retain the specialized talent required to remain competitive. The 2024 State of Tech Talent Survey, fielded early this year by the Linux Foundation and LF Training & Certification, has gathered valuable insights into global talent management trends and strategies, including a specific focus on the critical challenges faced by Japan’s IT industry.
In 2018, the Japanese Ministry of Economy, Trade and Industry (METI) warned that without urgent modernization of its legacy technology-based systems by 2025, Japan’s IT industry will face a digital cliff with potential losses of JPY 12 trillion per year (more than 2% of Japan’s 2022 GDP).
As the clock ticks ever louder toward this nearing deadline, the 2024 State of Tech Talent Japan Report provides new data-based insights into the lifelines that Japan’s tech sector can use to avoid METI’s predictions: talent management strategies and modernization initiatives.
The survey report uncovers significant challenges arising from skilled talent shortages and the urgent need for digital transformation. But despite these challenges, a strong commitment to training and upskilling staff will help Japanese organizations navigate the path to modernization and stay competitive globally. Opportunities abound, as 60% of Japanese organizations plan to increase investment over the next 18 months. Let’s dive in.
Japan’s technical talent market is very narrow.
Japan’s IT organizations are adapting their talent management strategies in response to this skilled workforce shortage. A key strategy to address the skill gap involves increased focus on in-house training and development (upskilling). Japan has become a global leader providing extensive training for inexperienced new hires, often through well-structured onboarding programs for fresh graduates.
Opportunity for improvement exists, as 44% of respondents noted that a big challenge with upskilling programs is that they take time and can be ineffective when training for complex roles.
Compounding the difficulties created by the narrow technical talent market, Japan’s IT sector also experiences a high turnover rate among new hires (47%) within 6 months of onboarding. Many organizations are tackling this problem by improving existing training infrastructures and creating flexible, targeted curriculums.
The most cited challenge in hiring technical staff in Japan is certifying claimed technical skills. Collaborating with external training programs to obtain certifications can help validate technical skills and make the hiring process easier.
More hiring barriers are coming down. Japan's traditional employment practices, including lifelong employment and rigid wage structures, are evolving. Government initiatives, such as the establishment of the Digital Agency in 2021 and a shift towards mid-career hiring, indicate a move away from these traditional practices.
To avoid the digital cliff, Japan’s IT sector must move quickly to reduce entrenched legacy systems – on average, 45% of the IT workload is still running on mainframe technologies. Integrating new technologies into these systems is complex but crucial for future growth.
Another key focus area is the adoption of generative AI (GenAI) as workforce enhancement. Japan’s IT sector is taking a strategic approach to complement its existing workforce with GenAI capabilities.
GenAI can improve training programs by allowing for easy customization of the training experience and creating scenario-based learning through simulated training environments. These strategies can increase engagement and be leveraged to address specific skill gaps.
The 2024 State of Tech Talent Japan Report shows the Japanese IT industry at a critical point. There are big challenges, especially with skilled worker shortages and modernizing legacy systems, but there's also a strong commitment to training and upskilling. By continuing to invest in these areas and adopting new technologies, Japanese IT organizations can navigate the path to modernization and avoid the looming digital cliff.