East Asia’s Economic Development and Japanese Firms’ ICT-Based Services Offshoring

Abstract

With the development of ICT since the 1990s, offshoring that occurred in America and Europe has rapidly spread to the rest of the world and continues to expand to this day. However, in the case of Japan, offshoring of business processes by ICT firms has been undertaken by a relatively limited number of firms, and the scale has also been small. Behind this are the sense of caution of Japanese firms toward outsourcing and their constraints of language and communication capabilities that are necessary for offshoring. Therefore, Japanese ICT firms prefer captive offshoring to offshore outsourcing and have slowly been expanding offshoring since the turn of the century. This also largely determines the structure of the offshore destination of Japanese firms. However, we have to take note that the ICT user firms, such as those in Japan’s manufacturing industries, are more internationalized than ICT firms and have been promoting the offshoring of ICT-based service processes to their subsidiaries. Moreover, we cannot ignore a serious scarcity of human resources needed for ICT-based processes of Japan. The offshoring of Japan, with its own peculiar features, could advance at a slow, but steady, pace. In this chapter, we will try to grasp the offshoring situation of Japan’s ICT-based services and clarify structural changes after the global financial crisis. We shall closely look at the features of the East Asian economy, which has been growing for over the past half-century and improving its function as a market. We shall consider future prospects and significance of the shift to East Asia of ICT-based service processes of Japanese firms.