The Future of RPO in Japan

January 18, 2024

As the world’s third-largest economy, Japan is home to many thriving industries, from electronics and manufacturing to robotics and other advanced technologies. After a period of deflation, the country has shown a strong rebound, approaching 5% nominal GDP growth in 2023, according to Morgan Stanley research. While this has made Japan an attractive investment opportunity for global companies seeking to expand in the APAC region, the Japanese job market has traditionally been notoriously difficult to break into.

Enter recruitment process outsourcing (RPO) — a strategic partnership that offers regional expertise and proactive talent acquisition solutions to ensure a successful recruitment process. But how can RPO help overcome unique challenges like aging demographics and lifetime employment?

In this blog, we’ll explore everything you need to know about RPO in Japan, from how and why it works to the best practices to succeed with a local RPO partner.

The Challenges of Recruiting in Japan

Before we dive into the intricacies of RPO solutions, it’s essential to understand the unique challenges of hiring in Japan. From the distinct business culture to social norms like lifetime employment, global companies can often find it difficult to navigate the complexities of Japan’s employment landscape, laws, and expectations — not to mention the language barriers. 

Let’s take a closer look at some of these key difficulties to understand how the RPO hiring process can help overcome them:

Age Demographics

The first and most apparent issue many people in the Japanese recruiting space point to is the aging population. Due to a combination of steadily declining birth rates, increasing life expectancy, and low migration rates, Japan’s age demographics are shifting older, resulting in a higher percentage of elderly citizens and a shrinking workforce. In fact, 10% of Japan’s population is 80 years or older, while over 36.2 million people are over the age of 65, according to the World Economic Forum.

Labor Shortages

Japan is also facing critical talent shortages, with the number of workers expected to fall more than 11 million — or 20% — by 2040, according to The Japan Times. Primarily driven by low birth rates and an aging population, these talent shortages are impacting a wide range of industries and sectors, with the situation further complicated by a recent rise in unemployment rates. As a result, even Japanese companies are searching for innovative staffing solutions to expand their talent pool.

Lifetime Employment

Shushin koyo, or lifetime employment, is the traditional system in Japan wherein employees are typically hired right out of university and stay with the same company until retirement. This practice is deeply ingrained in the culture, especially for major Japanese companies, limiting the talent pool by making it exceedingly difficult to find a candidate willing to switch jobs. However, newer surveys show this system may be changing, as a third of Japanese employees report they’d be willing to change jobs or work independently at some point in their careers.

Bilingual Talent

Finding bilingual talent is another significant challenge in Japan. The demand for professionals fluent in both Japanese and English is high, yet the supply remains limited. Less than 8% of Japanese people speak English fluently. While proficiency is improving, it’s not as widespread as some other non-native English-speaking countries, making it exceedingly difficult to find the right talent who is actively seeking a new position and speaks English well enough to operate in both languages.

Why Outsource Recruiting in Japan?

While the RPO service model was relatively new to Japan a few years ago, there’s been a notable uptick in adoption recently, especially among global organizations. In fact, the market size in Japan is expected to increase by 12.4% year over year, as it continues to gain traction. But what’s causing companies to leave behind the traditional staffing agency and search for RPO solutions?

Regional Expertise

Local RPO providers in Japan offer unparalleled regional expertise and essential knowledge for navigating the unique nuances of Japan’s labor market. With an in-depth understanding of local customs, regulations, and language, your RPO provider can expand your talent pool and tailor your recruitment strategies to find the right candidate for any position.

High-Quality Hires

Unlike a traditional staffing or recruitment agency, which focuses on filling positions as fast as possible, RPO providers specialize in delivering high-quality hires, often with specialized skills in niche areas. Leveraging advanced regional and market knowledge, along with sophisticated talent acquisition tactics, RPO providers can source, select, screen, interview, and hire talent that matches all your criteria, from hard and soft skills to experience, culture match, and values.

Flexibility and Scalability

Whether it’s a short-term hiring project or a long-term strategic partnership, RPO solutions offer exceptional flexibility and scalability. With the ability to quickly scale recruitment activity based on hiring demands, an RPO partner ensures talent acquisition aligns with business cycles and growth phases. If consulting is what you need, RPO providers can also help refine your existing hiring process to build a proactive talent pipeline.

The Promising Future of RPO in Japan

As the Japanese labor market continues to tighten and evolve, with an ever-increasing demand for specialized skills and bilingual talent, RPO firms are uniquely positioned to meet these complex hiring needs. From a deep understanding of Japan’s unique market to innovative talent acquisition strategies, an RPO partnership offers keen insight while expanding your talent pool and streamlining your recruiting process.

Best Practices for Successful RPO Talent Acquisition in Japan

The key to successful recruitment through an RPO provider is to find a partner willing to work with you. After all, they’re the RPO sourcing specialist, but you’re the specialist of your own business. To ensure a prosperous, long-lasting relationship, be sure to follow these three best practices:

1. Find a Partner Who Understands Your Business

The first and most crucial step is to find the right RPO partner who works as a seamless extension of your team. They should get to know the ins and outs of your business, its culture, and company values to ensure each candidate is a perfect match.

2. Leverage Their Local Expertise

Next, be sure your RPO partner is an expert in the local area. From speaking the language to understanding cultural nuances, it’s essential to have a partner with regional expertise. They can help you connect with and appeal to local talent.

3. Bolster Your Employer Brand

Finally, your partner should work with you to develop an attractive employer brand to catch the attention of job seekers and even passive candidates secure in their positions. With a positive image and a strong message, they can help you become a top pick for talent, driving them to you.

Boost Your Hiring Efforts in Japan With Envision’s Deep Regional Knowledge

Navigating Japan’s complex recruitment landscape requires a partner who not only understands the intricacies of talent acquisition but also possesses deep regional insights. 

Envision stands as the trusted partner of companies across the globe seeking to enter — or strengthen their presence in — the Japanese market. With our deep insight into the cultural nuances, hiring practices, and job market, we offer bespoke strategies to help you secure the right talent every time.

Reach out to an RPO expert today to discover how Envision can elevate your talent acquisition strategy.