Japan - the Next Frontier for India

India is the undoubted leader when it comes to IT outsourcing. For India, the largest market has traditionally been the U.S.  Out of the $100 billion or so revenues that India has earned from IT exports in 2012, a major chunk has been from U.S.A. However, the growth of IT in the U.S.A. is expected to remain steady. The challenge India faces therefore is to look elsewhere for expansion.

Next to America, Japan is the second biggest IT market in the world. Post World War II, the economy of Japan has witnessed a roller coaster ride. First, there was a recovery period that saw Japan surpass its prewar position. This growth was propelled mostly by the heavy chemicals industry. This was followed by a period of steady growth, which is mostly attributed to the IT industry, followed by a recession. Most of the issues Japan faces today are due to natural disasters like tsunamis and frequent earthquakes.

As of 2013, the Japanese IT industry is estimated to be in excess of $120 billion. Out of this chunk, Indian IT service providers get only about $500 million, which is very miniscule. Indian IT companies have established a presence in Japan for the past 20 odd years or so. However, Japan contributes to a little more than 1% of India's software exports.

Traditionally the Japanese are extremely conservative in their approach. They are methodical, and expect their vendors to be so. While the major IT players in India have matured now as far as software processes go, the Japanese companies still take a cautious approach in outsourcing to India.

The second most important barrier that India faces is the language issue. While Indians have an edge over the competition in speaking English, they are not so adept yet at speaking Japanese. A large number of institutes are coming up at cities like Pune, Mumbai, Bangalore, etc. to address this issue. However, most of the India's IT professionals still prefer to communicate through interpreters rather than learn Japanese themselves.

The current slump in the economy has forced Japan to adopt new models for delivering software. More and more Japanese companies are opening to the idea of using readymade software packages rather than custom built solutions. Secondly, Indian cultural values are more close to the Japanese than the West, and can work as an advantage for India.