September 2001 - Japan Inc.
IT Recruiting in Japan
Quality Over Quantity
by Tom Boatman
WHAT A DIFFERENCE A year makes. Flash back to 2000. Seed money was falling out of the sky. Tech jobs were falling out of trees. Local startups were scoffing at the low rumbling in the West coming from a tsunami that would rip the wheels off America's dot-com joy ride. "Japan would be different. Japan was well ahead of the curve," they said.
Japan was different. Like the kid who blows his balloon up too fast, Japan's dot-com bubble seemed to burst into thin air just as it was taking shape. Yet there wasn't even a loud bang to thrill us, just a quiet little "poof." Where does that leave the IT job market? Well, three points are clear. The online job boards are retrenching. Good old-fashioned "press-the-flesh" recruiting still reigns supreme. And, perhaps most important, quality not quantity is once again driving the market. The general feeling, however, is that there is plenty of room for cautious optimism.
"From a candidate's point of view, it's a good time to be looking, because the companies that are hiring are more stable," says Kerry O'Shea, "search" vice president of Oak Associates.
One might say that Oak Associates is part of the "old guard" of Japan's recruiting industry. They were founded in 1981 and serve primarily Western-capitalized companies looking for Japanese staff. Working both on a retainer and contingency basis, Oak Associates has offices in Tokyo and Osaka and has recently opened up a company in the United States called OakBridge to help provide a link between Japanese professionals and U.S. companies (and the inverse) on that side of the Atlantic, all part of a strategy to expand services worldwide.
"Because our clients are global, our economy is global," says O'Shea. "So even if the U.S. went into a long-term recession and Japan took an upturn, that could still be good for us, because Western companies would be shoring up their overseas operations." Although, he cautions that he's not hoping for such a situation. "I don't think there will be an improvement in the state of the local market during the remainder of 2001," says Linda Strazdins, vice president of the IT division of Robert Walters Japan K.K., the Tokyo office of one of the world's leading recruitment consultancies, with locations in 13 countries. Despite the sluggish economy, Robert Walters plans to hire 20 people and increase it's Tokyo staff to 50 by year end.
"We're impervious to bad markets. We're geared for hard times," says Paul Levine, CEO of Access Technology Japan. With 150 people on staff servicing over 250 clients, Access Technology is perhaps the largest IT-focused recruiter in Japan. At any given moment, Levine reckons, Access has access to jobs for 10,000 people.
"We started in 1992, which was the worst year in headhunting since it became a katakana word," says Levine. He explains that in 1992 there were about 300 companies offering recruiting services in Japan, including several English schools. By 1994, he says there were only 50 headhunters left."We are the retro-recruiting company," says Levine. Access is another member of the old guard of recruiters preferring to rely on "good old-fashioned consulting and high-quality personalized service," according to Levine.
While traditional executive search companies like Oak, Robert Walters and Access Technology are still experiencing measured growth, the companies in between -- those featuring a mixture of technology and tradition -- like CDS Consulting and Panache seem to be riding out the storm intact. "Our business is still growing, but it's a tougher battle to get that business," says Paul Goldsmith, president of Panache Corporation, a high-tech Tokyo placement and outsourcing company that also has a Web development wing called Panache Interactive.
Panache has been around since 1994, and gets most of its placement business from foreign-capitalized companies. Panache also has its own job board that generally lists some 200 positions.
"I don't think you're going to see a decline in demand for IT jobs, especially since Japan is trying to stimulate that industry," says Cynthia Green, vice president of human resources at Panache.
These days Panache is placing a lot of "helpdesk" operators and NT engineers and is always looking for 30-something, Japanese, bilingual individuals with experience overseas or in a Western-capitalized company here.
"IT is an area where 'soft' skills are not as important as technical skills," says Adriana Alexandrescu of Executive Search International (ESI). "You can accept an excellent programmer with poor interpersonal skills, but in senior-level positions more importance is placed on soft skills." Clearly the granddaddy of recruiters in Japan, Executive Search International has been helping Fortune 500 companies place executives in Tokyo since 1969. ESI also offers other services, such as outplacement, human resources and market-entry consulting.
"It's a client market out there," says Jason Dacaret, director and co-founder of CDS Consulting. "Companies have to make smart placements. They cannot afford to have someone quit in four months."
Under Dacaret's watch CDS has grown from three partners and two employees a year ago to a staff of 20 today and has recently moved into a brand-new, state-of-the art office in Tokyo's much ballyhooed Bit Valley. CDS is also preparing to launch a candidate/client management software system this year, but the details are still hush-hush.
"At present there are so many IT professionals on the job market that you have to be able to tell the difference between the candidates who can sell themselves well and those with valuable experience and great skills who don't know much about marketing themselves," says ESI's Alexandrescu.
Most recruiters in town agree that certain skills are still in high-demand despite the foundering economy: Unix, C++, Cisco (especially CCIE certificate), Perl, HTML/WML, XML and SQL server. And let's not forget communication skills. For Japanese window-shopping at Western firms, English communication ability is preferred. For foreigners looking at Japanese companies, local language skills are a must.
"We don't look at TOEIC scores," says Oak Associates's O'Shea, referring to Japan's standardized Test of English for International Communication. "Communication and "cultural fit" are more important. Can they adjust to the culture of the company that's hiring?"
"Language is like an additional degree," says Tim Ondo, chief operating officer of JCI Consulting K.K., a new recruiting company. "It takes the same length of time to develop and is as important in getting ahead, if you want to work for a non-Japanese company."
Ondo and Markus Leach formed JCI this year after spending the better part of the last decade running or working for Tokyo recruiting firms. Leach was president of Aegis Enterprises Ltd.; Ondo spent seven years with Veritas K.K. and three years with Japan Compass Inc. in Seattle. Why would someone launch a recruiting company in this bear market?
"This year has seen a marked slowdown, and we felt it was a perfect time to reorganize, expand the business, focus on bringing in experienced recruiters and improving our infrastructure so when the market picks up we'll be even better positioned to help our clients," says Leach.
Bernie Schiemer of James Harvard International agrees. "We believe the best time for our global expansion is in the middle of a recession, so when the market does pick up, James Harvard will be in an ideal position to take advantage of this." Schiemer and Andrew Murton founded the company in May 2000, with a focus on global investment banking, securities and e-commerce firms. The Tokyo office opens on September 3, 2001. Their five-year business plan is to build a global search organization based out of three primary locations -- London, Tokyo and New York.
Another newcomer is the ConnectedGroup, a Hong Kong recruitment consultancy servicing Fortune 500 companies in IT and investment banking as well as SMEs across the Asia Pacific. Established in 1997, the company opened their Tokyo office this year, headed by Hira Digpal and Dene McFarlane. The ConnectedGroup consulting team uses a variety of methods to attract clients, from traditional Internet-based marketing and headhunting to more innovative techniques -- a winning formula that Digpal declined to divulge to the competition.
"Our Tokyo office is growing in leaps and bounds," says Digpal. "We've successfully secured more business in two months than most companies would in 12." Digpal attributes the company's ability to thrive in a declining market to their strong relationships with clients. But the picture is not so rosy for everyone based in Tokyo.
Casting a net for candidates online
Online recruiters, however, have taken the hardest hit. Job Dragon scaled back its operations and eliminated a department. Upstart HiJobs was absorbed and relaunched by AEC Japan (which also owns and runs HeadHunter Japan). Asia-Net is hunkering down and DaiJob is holding on fast. On the other hand, newcomer CareerCross is showing promise.
"Companies like Job Dragon, Asia-Net and DaiJob need to find an imaginative breakthrough in their business models ... before they can become a threat to mainstream recruiters," says Jeremy Sanderson, the IT consulting manager of Wall Street Associates, a Hong Kong-based recruiter focusing on the securities industry. Wall Street has a staff of 25 in their Tokyo office.
"As far as I know we're the only profitable online recruiter that's growing at the moment," says Richard Bysouth, director of CareerCross Japan. After many years as a Tokyo IT recruiter, Bysouth launched CareerCross in September 2000 as an online job board and recruiting resource. At CareerCross 50 percent of the positions posted are IT-focused.
"IT recruiting is incredibly competitive. It's all about speed," says Bysouth. "Recruiters don't have time to waste, and IT pros are willing to fling their resumes all over the place."
That's why Bysouth has "cut out the middle stuff" and designed a job site that offers "speed, flexibility and ease-of-use." Bysouth currently lists recruiters such as Michael Page, Robert Walters, Wall Street Associates, Man Friday and Sigma Staff among his clients, as well as companies such as Fujitsu, PSI Net, McKinsey and Nasdaq.Jobs slots can be purchased on CareerCross on a monthly basis in groups of 1, 5, 10, 20, 40 and 80. Within a slot, clients are free to delete and add jobs as often as they like. "The key to finding good staff is to make the jobs sound interesting," says Bysouth, who predicts that CareerCross will soon be the largest bilingual job site in Japan.
"Personally, I think that the online recruitment companies specializing in the Japan market have not yet matured," says Strazdins. "Job Dragon is not the first online recruiter that has not been doing well. I think we need to look at each model that was adopted by each organization and ask, 'why?'" However, the folks at DaiJob think they have a model that works. Daijob.com Inc. is LINC Media's Internet job board launched in 1998. DaiJob features several sub-sites that cater to various groups of job seekers -- Gaishi.com for those interested in foreign-capitalized companies and Layer-8 Jobs.com for programmers. DaiJob caters to between 100 and 200 companies advertising some 11,000 jobs.
"What makes a company successful online is its understanding of Web marketing and technology capabilities," says Terrie Lloyd, DaiJob's founder. "Neither skill is cheap or easy to learn. Luckily, the principals of DaiJob have been in both fields for many years and know what's required." One of the more interesting online stories from last year, was HiJobs, a totally free bilingual job board launched in Tokyo in July. Without any advertising, HiJobs.com attracted 230 job postings in its first two weeks of operation.
Today, however, HiJobs is no more, having been absorbed by Headhunter Japan K.K. an online recruiter launched last year by the recruiter Allied Employment Consulting Japan (AEC) to add an interactive side to its recruiting business.
"Headhunter Japan is looking to become the premier online recruiting site in Japan," says Rambo Halpern, vice president of business development for AEC. Headhunter currently lists Barclays Capital, Lehman Brothers, JP Morgan, Intel, Adobe and SAP among its clients.
"Our aim is to combine the skills and services of a traditional headhunter with the power and resources of Internet recruiting," says Halpern. "As the headhunting industry moves more and more to the Web, the human side of the business will become increasingly important."
Taking care of the candidates
"I love the hunt. I love the hit. But, above all, I love to help people. That's why I love recruiting." Tim Ondo, president and COO of JCI Consulting K.K. Whether you call it recruiting or "headhunting," the fact remains that recruiters are dealing with people and their lives. Paul Goldsmith of Panache likes to describe his candidates as "our family of engineers."
"We don't do headhunting, we do head farming," says Access Technology's Paul Levine. Levine, however, is talking about career-path guidance rather than some kind of new human biotechnology.
"It's like taking people out of cults -- we have to deprogram them and teach them what a career is." We have to conduct painstaking consultation to change their paradigm so that their understanding of career meets reality," says Levine.
Levine notes an interesting trend. In the past, 95 percent of replacements for foreign-capitalized companies were moving from one foreign company to another. He predicts that more and more, Japanese professionals in big domestic companies will migrate over to foreign-capital and venture startups. "Most salarymen still believe that if they change jobs, their pay will go down because they will lose seniority. We have to teach them that they are not at the whim of the HR department," says Levine.
Yet there's still a learning curve. Traditionally, perhaps even culturally, according to Levine there's still an aversion to periodic job changes and especially mid-career moves in Japan. Unlike in the United States where in some industries like advertising and IT it's common to change jobs every couple of years, Japan has held fast to the notions of corporate loyalty, which is rewarded by "lifetime employment." But times are changing. Even Japanese recruiters are bucking the trends these days, however. The once taboo mid-career job change is no longer considered shameful.
"Personally, I'm interested in finding jobs for older candidates with high skills and capabilities," says Keishi Takase, executive director of ILAS Co., Ltd. (International Amenity Life Services), an IBM Japan affiliate specializing in IT placements and career counseling.
"If a candidate earning 8 million yen a year comes in and tells me he or she's looking for a job paying 15 million, I'd want to hear what he or she could do to justify that level of salary," says Jeremy Sanderson of Wall Street Associates. "A few years back, a Web developer could get by just with HTML and a copy of Dreamweaver. Today one needs much more sophistication to stay ahead."
Often the headhunter's job requires educating and grooming candidates for positions. These might be people who have not shopped for a job in 10 years -- an eternity in recruiting.
"Our business requires making sure that candidates have a very good understanding of career path. Clients of ConnectedGroup do not expect employees who want to leap up the management ladder. At the same time, they do not want to invest in someone who expects to be doing the same job for 10 years," says Hara Digpal. Like them or hate them, recruiters have not taken the easy path, the business of finding people jobs.
Where do we go from here?
One thing is certain about the recruiting industry, there are as many opinions as there are players, and strategies for success seem to sprout like weeds. Nonetheless, with the exception of bankers, no one keeps their ears to the ground as well as headhunters.
So what's the future hold? Why not ask a recruiter who spent a large part of her career specializing in finding IT professionals for the financial industry? "I expect to see a continued demand for programming staff," says Kerry Condon of JDV International, a Seattle-based recruiter who opened her Tokyo office in 1999 after spending several years making matches in New York's financial services market. JDV's premise is that quality recruiting practices can be implemented anywhere effectively.
"I do see a lot of the first-tier infrastructure roles being outsourced. Outsourcing can be an effective way of reducing IT costs, and I expect this trend to continue," says Condon.
Bernie Schiemer of James Harvard International recalled a June 2001 article in the London Financial Times on the investment banking market in Japan. Their survey suggested that the foreign investment banks in Japan are, on average, looking to expand their operation by 35 percent in Japan over the next three years. "Once the local securities houses finally move to restructure their bad debt -- watch out, this market will explode!" says Schiemer.
And lest we forget the Internet. Jason Dacaret of CDS expects job growth to continue coming from e-business models, whether land- or wireless-based. "What's most promising is that Japan is the number two Internet, e-business market in the world, but at the same time it's the most underdeveloped," says Dacaret. "The Internet job market took quite a big downturn this year, but the Internet is not going away. It just grew too quickly," says JCI's Ondo. "I expect Internet-related jobs to do well in the future, including CG designers, content programmers, sound creators and network engineers. Whether it's MAP, WAP, SAP or The GAP, it's all on-line."
No doubt there will be plenty to keep an eye on in the coming months.
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