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Sudhindra's writes a fortnightly column in Deccan Chronicle / Asian Age in the Business - Technomics section. This column 'Tech-Sutra', will appear every alternate Monday starting 15th Jun 2009.
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Delhi, Mumbai, Kolkata, London
Monday, 7th December 2009
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:: Business / Technomics
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In the land of Rising Sun
7th December 2009
Sudhindra Mokhasi
My Japanese friend Yuka Kitagami was visiting over the weekend. She and I had worked in the Japanese market for many years and had played a role in the Japanese foray of one of India's leading companies.
After fond reminiscences about Sake, Sushi, Onsen and Maid café in Akhiabara, nightlife in Roppongi, and automatic toilet washlets, our discussion inevitably veered to the continued challenges faced by Indian IT companies in acquiring business from Japan.
We may be universally recognised as leaders in the outsourcing game but yet, in Japan, which is the world's second largest IT services market, our share is a measly 2 per cent. In the currently offshored Japanese IT business, our share at around is 13 per cent as compared to China's share of over 50 per cent. For context, the overall Japanese services business is estimated at $110 billion.
So why this anomaly? Is the world's second largest market not important enough for us? Does Japanese IT make business sense? Is business acquisition so difficult? Are there protectionist barriers?
Aren't we trying hard enough? What do the Chinese have that we have not mastered?
Here's what makes Japan so different.
KEIRETSU: Historically, Japan has been a closely held market. General McArthur of the US took the first step to dismantle the early cartels called Zaibatsu. Now the market has evolved to what is called a Keiretsu kind of system. Every big company has its vendors (Japanese) who in turn have their sub vendors etc., all of whom are bound together through a common investor -- usually a bank that is controlled by the parent company or entrenched by long term association.
Yuka says it ensures a common desire to succeed, a safety cushion for all members, a more or less ensured business stream for the vendors and most importantly bestows power to the parent company to extract maximum value from vendors. It is very difficult for Indian vendors to plug into this Keiretsu and at best they end up working with the third or fourth tier in the pyramid -- a small bit player with minimum influence.
RELATIONSHIPS MATTER: With most western countries, the con tract is the king. If somei thing is not in the contract then it is either not deliv ered or is delivered at addi tional cost. That is a typical vendor-client relationship.
In Japan the relationship comes first and the vendor. client relationship is always viewed as a part nership. The vendor is - expected to absorb the - dynamics within the cust tomer environment, adjust accordingly. This clause becomes a litmus test espe cially if the vendor is an outsider -- a foreigner or gaijin as they are called in Japan. The trustworthiness of the vendor is measured in terms of how many years , he has been able to sustain and contribute into the relationship. If the vendor endures and is capable, the deal sizes get bigger over a period of time.
LANGUAGE: The first, second, third and mostly the only language in Japan is Japanese. Period. If you want to have any chance of even discussing business in Japan you are expected to know Japanese well, at least the oral form of the language. Now Japanese is a high vocabulary, context s sensitive highly nuanced language. To acquire pass- able mastery requires any where between four to six months and the learning drops off exponentially.
- Don't even ask of the writt ten Kanji form with its 16,000 plus unique charac ter-words.
CULTURE: Loss of face , and implicit messaging, key Asian traits, are more l pronounced in Japan.
Japanese are a very proud race and would be reluctant to engage with you if they feel that their English or technological deficiency would show them in lesser - light.
- Indian IT players have been playing in Japan since the mid 90's. The most sucr cessful engagements have been where they have been able to work with the big companies themselves - typically in the hi-technol-ogy and embedded space - and in application develop ment and maintenance - space of an MNC's Japan ese operations.
Next on Tech-Sutra: Why we should stay engaged in Japan and why the Japan- ese will need us more than we do them!
Sudhindra Mokhasi is CEO of a technology firm and author of ‘BPO-Sutra: True stories from India’s BPO & Call Centers’
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