Land of the Rising Sun

I left my heart in Tokyo… The Romance between Shared Services and Japan continues. It’s fair to say that the Japanese market is no stranger to the world of shared services. This is no first-date territory, more like the rekindling of an old flame… and yet, right now, timing seems perfect: the two are well and truly smitten. What’s changed? It seems it’s not just a question of chemistry. These childhood sweethearts have a thrown a little bit of history and economics into the equation as well. Emma Beaumont Reports It’s no secret that Shared Services and Japan have a history; and it’s a long one – full of ups and downs, dating back to the late 1990s when SSC take-up was slow, at best. A shared services "reform" surged activity in 2004, but was closely followed by a dip before a second spike in 2007 when BPO was largely introduced to Japanese companies (just prior to the collapse of the global financial markets). But 2010-2011 seems to have re-opened up a new chapter in this tempestuous relationship, and this time it seems there’s no stopping them. Maybe there really is merit in "third time lucky" for some. So what’s with the chequered past and what’s really different now? The opening keynote at SSON’s first ever event in Tokyo, Offshoring, Outsourcing & Shared Services for Japan, saw Deloitte identify three major, interrelated trends that have dramatically contributed to the renewal of this love affair: A shrinking domestic market; the shifting position of US companies within the Japanese market; and an increased appetite from the Japanese market to compete on a global scale. These factors are collectively bringing Shared Services and BPO firmly back into the spotlight. The typical characteristics of Japanese companies lend themselves well to the situation, with many having already decentralised their structures. In addition, a sharp depreciation of the Yen (combined with the shrinking domestic market) led to a significant increase in Japanese companies purchasing international companies from the West. Typically, the newly acquired organisation will have better systems, which can lead to all sorts of consolidation issues…. cue shared services 3.0! In summary, what I took away from presentations given by the Japanese entities of world famous brands such as Tesco, Nissan, Honeywell, ABB, Standard Chartered Bank and Pfizer, as well as the 40+ local Japanese companies I met onsite, was that shared services and outsourcing are far from being viewed as purely cost-reduction tools in Japan. For many companies, that phase is now largely completed and enhancement of global management is perceived as their foundation for future growth. What does the Japanese SS&BPO landscape look like today and where is it heading next? It’s hard to say. History has taught us to expect the unexpected in the land of the rising Sun, but at least for the short-term, the appetite for furthering shared services and outsourcing activity is strong. With Chinese locations such as Dalian proving popular for offshored Japanese processes, and post-merger integration a primary concern for more and more Japanese companies in today’s globalised markets, it’s likely this wave has some way to go yet. So, star-crossed lovers or happily ever-after? No-one truly knows. But I’d put my money on the latter, judging by the 80+ practitioner crowd I met in Tokyo for SSON’s first toe-dip into this market. For Multi-nationals as well as domestic Japanese companies, the mood was reminiscent of Western & Eastern Europe in the early noughties: People are waking up to possibilities that lie ahead – and they are waking up fast.

Land of the Rising Sun

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