The issue of Japan’s falling competitiveness has been a major national topic. Solutions generally center on promoting women in the workforce, lowering the corporate tax rate, or various poorly defined regulatory reforms. According to data from the independent Information Technology Promotion Association of Japan (IPA), there is another major pain point which cannot be ignored – the outright paucity of engineers.
An IPA report states that a full 90 percent of companies have insufficient engineering staff. No relief is in sight. The Ministry of Economy, Trade, and Industry has reported that by 2015, 680,000 new engineers will graduate from Japanese universities, a negligible bump from 570,000 in 2005.
Lack of engineers in companies and in the country notwithstanding, Japanese companies must still find a way to get websites and apps developed. International outsourcing seems like the easy answer but, considering Japan regularly ranks as one of the lowest scoring countries for TOEFL, there are many companies which cannot communicate their business needs to non-Japanese contractors.
Sekai Labs is a startup trying to fix this. The service, only six months old, connects Japanese corporations to individual or team-based contractors around Asia which have at least one member who can communicate smoothly in Japanese. Corporations define the project they need and can then browse for the team which has the necessary skills. So far it claims to have registered 300 teams for a total of 3,000 engineers. COO Ikkei Okuma told Tech in Asia that he expects to have 10,000 engineers in the network by the end of the year.
The ten person team has a lot of work ahead. Revenue figures are not released but a company spokesperson confirmed that Sekai Labs has received about JPY 400 million (US$3.9 million) in project requests since launch. Though a small number, the team has done work for a few very well known national firms. Investors seem to have a positive opinion of the company as well. Last week, Sekai Labs announced a US$1.2 million funding round led by East Ventures, SMBC Venture Capital, and Mitsubishi UFJ Capital. (Disclosure: East Ventures is an investor in Tech in Asia. See our Statement of Ethics for further details.)
Though the company currently centers around connecting Japanese corporations to Japanese speaking developers abroad, Okuma wants to make a service that can connect any company to any developer, regardless of language. “If we combine a translation crowdsourcing service and specifically trained bilingual communicators, we will make our Sekai Lab platform more flexible. For example, a Chinese client to an Indian developer team or an Indian client to a Vietnamese team.”
Sekai Labs’ early traction is indicative of both the strength and weakness found in Japan’s startup ecosystem. Major corporations are putting more and more trust into startups, increasing opportunities and revenue for fledgling firms. However, this particular case also exposes corporate Japan for being unable to make engineering and strong English ability appropriately powerful assets on the job market. This state of affairs is unlikely to be quickly reversed. That is a definite boon for Sekai Labs, but a less hopeful sign for Japan’s technological endeavors.