IT Outsourcing - Japan

Japan

Revenue in the IT Outsourcing market is projected to reach US$36.14bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 8.11%, resulting in a market volume of US$53.37bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$522.40 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

Japan, known for its technological advancements and innovations, has been a significant player in the IT outsourcing market.

Customer preferences: Japanese companies have been outsourcing IT services to cut costs and improve operational efficiencies. With the rise of digital transformation, businesses in Japan are increasingly looking for outsourcing partners who can provide them with innovative solutions to stay competitive in the market. Additionally, Japanese companies prefer outsourcing partners who can provide them with high-quality services and have a deep understanding of the local market.

Trends in the market: One of the significant trends in the IT outsourcing market in Japan is the increasing demand for cloud-based services. Japanese companies are looking to migrate their IT infrastructure to the cloud to reduce costs and improve scalability. Another trend in the market is the rise of artificial intelligence (AI) and machine learning (ML) solutions. Japanese companies are increasingly adopting AI and ML solutions to automate their business processes and gain a competitive edge in the market. Furthermore, there is an increasing demand for cybersecurity services as Japanese companies are becoming more aware of the risks associated with cyber threats.

Local special circumstances: Japan has a unique business culture that places a high value on relationships and trust. Japanese companies prefer outsourcing partners who can build long-term relationships and have a deep understanding of the local business culture. Additionally, Japanese companies are known for their attention to detail and quality, and they expect the same from their outsourcing partners.

Underlying macroeconomic factors: Japan has been facing a labor shortage due to its aging population, and this has led to an increase in outsourcing. Additionally, the Japanese government has been promoting digital transformation initiatives, which has led to an increase in demand for IT outsourcing services. Furthermore, Japan has a highly developed IT infrastructure, which makes it an attractive destination for outsourcing.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.