Hiring Japan’s most talented technology personnel is challenging but rewarding for companies seeking to enter this highly competitive market. With a critical demand for top engineers and a stable-oriented labor force, local labor practices need to be known to be successful. In this guide, we’ll walk you through everything you need to know to hire tech talent in Japan, from how to manage legal requirements to accessing the best recruitment channels. Stay with us to discover!

Challenges of hiring IT talent in Japan

Expanding into Japan’s tech market comes with significant hurdles, especially for international companies aiming to build IT teams in Japan. 

1. Language barriers

Despite Japan being referred to as a technological leader, professional proficiency in English is low. Many IT professionals prefer staying within Japan-based companies, making it more challenging for multinational firms to recruit local tech talent. Employers thus might need to choose between hiring from a limited pool of bilingual professionals or developing new hires through language courses.

2. Cultural and business practices

Unlike many Western recruitment models, the Japanese labor market adheres to long traditions. The “Shinsotsu” system prioritizing new entrants to the market for permanent labor diminishes the entry of mid-pro managers with expertise in specialized IT.

In addition, Japanese corporate culture is greatly concerned with stability, seniority, and career development over a long period. Unlike most countries in the West, where a change of job is common, Japanese professionals don’t switch companies, particularly if the offer comes from a foreign company.

3. Talent shortages and high competition

Japan is facing a critical shortage of skilled IT workers, driven by an aging population and a declining birth rate. According to a report by METI (Ministry of Economy, Trade and Industry), Japan will face a shortage of approximately 450,000 IT engineers by 2030. This shortage is particularly acute in fields such as AI, cybersecurity, and cloud computing, where the demand remains strong. Companies that want to hire tech talent in Japan must contend not only with other businesses but also with long-standing local companies that can provide more stable employment and longer-term career advancement.

This intense competition also impacts recruitment costs. Many agencies charge placement fees of 30–40% of a candidate’s annual salary, making hiring mistakes particularly costly.

4. A passive job market

Unlike in many other countries, where professionals actively seek new opportunities, Japan has a largely passive job market. Most experienced IT professionals are not actively looking for new roles, and job changes among workers over the age of 35 are relatively rare. This makes it difficult for companies to directly reach qualified candidates, adding challenges in building IT teams in Japan.

5. Slow hiring decisions

The hiring process in Japan tends to be slower than in many other markets due to the country’s consensus-driven decision-making culture. Candidates often expect multiple interview rounds and time to develop trust before committing to a new role. For companies looking to hire tech talent in Japan, this extended timeline can be a major challenge, especially when trying to fill urgent positions.

Additionally, strong labor laws in Japan make layoffs and redundancies more difficult, making businesses more cautious about hiring decisions.

Steps to build a tech team in Japan

Building a successful tech team in Japan involves a well-planned, strategic approach. Each step from defining hiring needs to optimizing and scaling your team is crucial to ensure you attract and retain top tech talent in a competitive market. Below are the essential steps to help you build a team in Japan.

Step 1 – Define hiring needs

The first critical step when you build IT team in Japan is to identify your specific hiring needs. Begin by identifying the roles essential for your team, such as backend developers, frontend engineers, or QA testers. For each role, you should establish the experience level needed, whether junior, mid-level, or senior, and determine how many positions you need to fill. It’s also important to allocate the right budget to ensure competitive salary packages, in line with Japan’s market standards. 

Setting a realistic hiring timeline will help you avoid delays in business operations and product development. Additionally, research the local talent pool and understand industry trends, as this will guide you in crafting effective job descriptions. Tools like Google Docs or Trello can be used to document and manage your hiring strategy, ensuring a smoother recruitment process as you look to hire tech talent in Japan.

Step 2 – Choose a hiring method

Once you have defined your hiring needs, the next step is to decide whether to establish a legal entity in Japan or to partner with external services to hire employees. You can use services like Professional Employer Organizations (PEOs) or Employer of Record (EOR) services, such as Deel or Remote.com. These services allow you to hire tech talent in Japan without establishing a local entity, which can be cost-effective and less time-consuming. Another flexible option for companies in the early stages is to outsource or hire freelancers, but it’s crucial to ensure compliance with local labor laws, including tax and social insurance obligations.

Step 3 – Develop a recruitment strategy

To successfully hire tech talent in Japan, developing a recruitment strategy that effectively attracts the right candidates is key. Begin by crafting clear, compelling job descriptions that outline the roles, responsibilities, required skills, and company benefits. Japanese job seekers tend to prioritize stability, work-life balance, and career growth, so make sure to emphasize these aspects in your job listings. 

Next, choose the right recruitment channels to reach local and international talent. Platforms like Wantedly, Green, and LinkedIn are excellent for sourcing candidates in Japan.

Step 4 – Conduct a structured hiring process

Once you begin receiving applications, implement a structured screening process. The process should include multiple rounds: an HR screening, technical assessments like coding tests, and technical interviews with senior engineers. Additionally, conducting cultural fit interviews with leadership ensures that the candidate aligns with your company’s values and environment. 

Step 5 – Onboarding & employee integration

You need to provide new hires with all the necessary documentation, including company policies, benefits, and employment contracts, to ensure they have everything they need. Make sure their work tools are set up beforehand to ensure a smooth transition. Organize an introductory session to help new hires meet their team members and get acquainted with the company’s workflow. 

Integration doesn’t end after the first day. It’s essential to conduct regular check-ins during the first week, first month, and third month to address concerns and confirm alignment with company goals.

Step 6 – Optimize & scale the team

As your company grows, continuously assess your team structure and hiring strategy to align with evolving business needs. Regularly evaluating team performance and identifying skill gaps will help you determine when and how to scale your team. Employee feedback, performance reviews, and market trends should guide decision-making regarding promotions, training, and additional hires. 

Luvina – Helping global companies build teams in Japan

Entering the Japanese market is especially challenging and requires local expertise, precision, and a profound understanding of the business culture. Luvina has been at the forefront of helping global companies build IT teams in Japan with a seamless solution for hiring tech experts in Japan under its Build-Operate-Transfer (BOT) approach and strategic IT partnerships. Luvina’s BOT model is specifically designed to cater to the needs of those businesses that want to operate their business successfully in Japan.

• Build: Luvina assists in building IT operations that meet Japanese standards to ensure compliance and quality from the onset.

• Operate: To manage these teams, offering continuous support and uninterrupted operation.

• Transfer: Once the operations have been optimized to maximum levels, Luvina ensures control transfer to the in-house staff of the client, which has an operational and independent IT unit.

What differentiates Luvina is our profound understanding of the market, developed over 20 years of navigating Japan’s intricate business and regulatory environment. Firms that ally with Luvina enjoy cost savings, a broad local network, and the guarantee that their IT solutions conform to Japan’s stringent quality standards.

If you want to hire tech talent in Japan, learn how Luvina can help you build a high-performing team and optimize your operations for long-term prosperity.

Conclusion

Hiring IT talent in Japan is complex, but you don’t have to do it alone. Luvina stands prepared to support you every step of the way. Let Luvina’s experts simplify the process and help you scale. Contact us today!