IT industry in Japan, how will things turn out by 2030?

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IT industry in Japan, how will things turn out by 2030?

This article sheds light on the recent trends, future job prospects, and upcoming issues in the IT industry one should expect as an IT professional.

Jump to: 

1. Recent Trends in the IT Industry

  • AI & Big Data
  • AR & VR
  • Increasing Demand for Electric Commerce (EC) 
  • 5G Implementation
  • Development of X-tech (Cross Tech)
  • Promoting IT in the After-Corona

2. Future Prospects of the IT Industry

  • One of the Top Industries in the World 
  • Increasing Demand for IT in Various Industries
  • Demand for IT personnel is increasing year on year

3. Future Challenges in the IT Industry

  • Shortage of IT Personnel
  • Long Working Hours for Engineers

4. Conclusion

 


 

Recent trends in the IT industry 

The rise of the IT industry is often described as the third industrial revolution. It would not be an exaggeration to say that it is impossible to live a life without IT in the future.

Let's take a look at the six upcoming trends in the IT industry: 

 

1. AI and Big Data

People often mistakenly assume that AI and Big data are the keys to solving every major problem in the world, but when the author spoke to an IT employee, they said “many job hunters misunderstand the true meaning of AI and big data and tend to use the terms blindly.” The employee further elaborated that students often look to AI as an answer to their problems in an internship or a group discussion, but that only tells the employer that they haven’t been thinking critically about the problem at hand. 

AI and big data


Students have yet to understand that AI does not work alone, but works best when it is paired and used with Big Data. In order to stand out from other job hunters, you must have a clear idea of the future you want to create using AI, instead of throwing the term around blindly.

 

2. The spread of AR and VR 

AR and VR technology, made famous by the popularity of Pokémon Go in Japan, is said to be in even greater demand in the future.

Woman using the VR technology; VR

AR stands for "Augmented Reality", a technology that uses computers to add more information to the actual scenery, terrain, and sensations. VR, on the other hand, stands for Virtual Reality, a technology that allows users to simulate a computer-generated three-dimensional space through sight and other senses.

According to the IDC Media Center, investment in AR and VR technology is expected to double every year until 2021 (especially with GAFA, Google, Facebook, Apple, and Microsoft in fierce competition). AR/VR technology is not only used in games, but also in medicine and education, and is probably the second most popular technology in the IT industry after blockchain.

 

3. Increasing demand for Electric Commerce (EC) 

In Japan, Rakuten, Amazon, and ZOZO, and in neighboring China, Alibaba and its founder Jack Ma are attracting attention, but the EC (Electric Commerce) industry is also attracting attention.

According to the results of the Ministry of Economy, Trade and Industry's "Survey on Electronic Commerce", the size of the e-commerce market saw a rapid rise from 7.7 trillion yen in 2010 to 16.5 trillion yen in 2017, and we can expect it to continue to grow. 

On a slightly different note, the Japanese government has announced in its "Future Investment Strategy 2017" that it will increase the percentage of cashless transactions to 40% by 2027, and as cashless transactions continue to grow, we can expect to see even more e-commerce sales in the future.

 

4. Implementation of 5G

5G is short for "5th generation mobile communication system", which has three features: high speed and large capacity, reliable and low latency communication, and many simultaneous connections.

The commercialization of 5G in Japan began in March 2020. Major telecom operators and the Ministry of Internal Affairs and Communications (MIC) are leading efforts to improve the environment for the widespread use of 5G and to research and develop 5G technologies.

As the implementation of 5G progresses in a wide range of industries and fields, it is expected to bring benefits such as improved business efficiency and the creation of new added value.

 

What is 5G

 

According to the Ministry of Internal Affairs and Communications "White Paper on Information and Communications", local 5G has been established as a mobile communication system that can be used flexibly by various entities according to the individual needs of regions and industries, apart from nationwide services provided by mobile phone operators.

"We are promoting the development and verification of models for solving problems using local 5G from 2020, mainly in the fields of agriculture, infrastructure and construction, safety and security, and mobility.”

 

5. The development of X-Tech Use of IT in the After-Corona period 

X-Tech refers to new products, services, and initiatives that combine existing industry businesses with advanced technologies such as AI, Big Data, and IoT.

The development of X-Tech is due to the importance of DX (Digital Transformation) in the world as a whole and the fact that IT and ICT, which were previously only used by certain companies, are now being accepted by all industries and sectors.

There are many different types of X-Tech. The following are 10 of the most notable sectors and industries.

  • AgriTech (Agriculture)
  • Auto Tech (Automobiles)
  • EdTech (Education)
  • FinTech (Finance)
  • HealthTech (Healthcare)
  • HRTech (Human Resources)
  • InsurTech (Insurance)
  • MedTech (Medicine)
  • RETech (Real Estate)
  • SportTech (Sports)

 

6. Use of IT in the After-Corona period

According to the Trade White Paper by the Ministry of Economy, Trade and Industry (METI), the spread of the new coronavirus infection is expected to limit human-to-human contact and accelerate the use of digital communication, such as teleworking and online conversation applications. There is also an increase in the use of e-commerce and subscription-based services that can be enjoyed in the privacy of one’s home.

The chart below shows the growth in sales from online sales by world region (2020). 

Source: Ministry of Economy, Trade, and Industry (METI), Trade White Paper: 2-12: The Expansion of the Digital Economy and the Corona Shock

 


Future Prospects in the IT Industry 

 

1. One of the Top Industries in the World 

As explained in the article "Industry Research: What is the IT industry?" The market size of the IT industry in Japan is 99.8 trillion yen, accounting for 10% of the total, which is the largest.

graph on the future prospects of IT indsutry

Source: Ministry of Internal Affairs and Communications "Survey on Economic Analysis of ICT in FY 2008".

In addition, eight of the top 10 companies in the world market capitalization ranking (as of August 6, 2020) are in the IT industry, excluding Johnson & Johnson (9th) and Wal-Mart Stores (10th). Market capitalization is the total value of shares issued by a company. The high price of a company's shares is not only a sign of its current performance but also a sign of its future growth potential. 

 

2. Increasing Demand for IT in Various Industries

IT is used in a variety of industries and fields, and its impact is increasing every year. The reason for this is that IT can leapfrog the progress of an entire industry by improving operational efficiency and solving industry problems.

For example, in the education industry, there has been a lot of talk about an IT-based learning format called "e-learning". "E-learning”  is an educational system that uses ICT technologies such as computers and the internet. It allows learning to take place at any time and in any place, and it can store past learning data to provide a learning format that suits you at any time.

The use of e-learning has had a significant positive impact on the education industry by enabling each individual to learn more effectively.

Similarly, IT can be used to help advance a range of industries.

 

3. Demand for IT personnel is increasing every year

According to the Ministry of Economy, Trade, and Industry (METI), the demand for IT personnel (people who can use or make use of IT) is increasing every year: 1.09 million in 2018, 1.29 million in 2020, and 1.64 million in 2030 (forecast).

As long as the demand for IT itself and technological advances continue, the demand for IT personnel will only increase. The high demand for people to work in an industry is a sure sign of the growth potential of that industry. In this sense, it is safe to say that the IT industry has a promising future, as the demand for IT professionals is increasing. However, there are a number of challenges that the IT industry faces in the future.

In the next section, we will discuss two of the challenges that the IT industry faces in the future.

 


Future challenges in the IT industry 

 

1. Shortage of IT Personnel 

As mentioned above, with the rapid development of IT, the demand for IT staff is increasing.

On the other hand, the supply is not keeping pace with the demand and the shortage of IT personnel has been identified as an issue. The shortage is expected to grow from 170,000 to 370,000 by 2020 and to 790,000 by 2030.

There are a number of measures currently being taken to address the current labor shortage, such as programming education for junior and senior high school students and the introduction of compulsory programming in 2020. However, the effects of these measures have yet to be seen.

The shortage of IT staff is an issue that the IT industry cannot afford to turn a blind eye to in the future.

 

2. Long Working Hours for Engineers

Another of the future challenges for the IT industry is the long working hours of engineers.

While we are suffering from a serious shortage of labor, the progress and demand for IT technology is unstoppable. As a result, the burden on our current engineers and programmers is increasing day by day, and they may be forced to work long hours.

In addition to the shortage of labor, another factor contributing to the long working hours of engineers is the "multiple subcontractor structure".

The multiple subcontracting structures refer to a subcontracting structure in which a large IT vendor orders a project to a medium-sized subcontractor, and that medium-sized subcontractor, in turn, asks a smaller subcontractor to do part of the development. In this way, a pyramid structure is created, with the main IT vendor at the top.

This structure of multiple subcontracting has advantages for both the top and the bottom, as it allows a small company to take part in the process of a large project, or to solve a problem by distributing the work to subcontractors even if it cannot be taken care of by the company itself.

On the other hand, there are also a number of disadvantages. Engineers working for subcontractors are sometimes forced to work long hours due to unreasonable deadlines set by their superiors and vague middle management.

Furthermore,  the more layers of work there are in between, the less profit there is for the lower levels. For this reason, companies with low profits may not be able to pay their engineers a salary commensurate with the amount of work they do, and the disparity in treatment between them and the upper levels is also seen as a problem.

 


Conclusion 

In this article, we introduced some of the recent trends, future prospects, and challenges in the IT industry.

Knowing the recent trends, future prospects, and challenges in the IT industry will help you to visualize working in the IT industry in a more concrete way. We hope that this article will help you to better understand the IT industry.