Japanese staffing agencies making push to expand abroad

July 10, 2012

By YUKO MATSUURA/ Staff Writer

At a seminar in Tokyo in June, representatives of Pasona Group Inc., the third largest temporary staffing service in Japan, briefed company officials involved in foreign operations on how to be successful in setting up operations overseas.

“Wages in India are rising rapidly in recent years,” warned a Pasona official. “You need to be careful about establishing a business based on the image of cheap labor.”

On headhunting for senior officials in Indonesia, a Pasona representative said the promise of a company car will make the recruiting pitch easier.

“Having a company car is a status symbol in Indonesia,” the Pasona official said.

Japanese temporary staffing agencies such as Pasona are increasingly eying Asian markets as potential clients intensify their push into emerging economies.

Manpower supply firms in Japan used to provide services primarily aimed at the domestic market.

But the collapse of U.S. investment bank Lehman Brothers in autumn 2008 forced them to look beyond Japan for business opportunities.

Hit hard, Japanese businesses were forced to shed large numbers of positions for temporary workers to weather the economic downturn.

Overall sales of the Japanese manpower industry plunged to 5.3 trillion yen ($69.74 billion) in fiscal 2010, down from a peak of 7.7 trillion yen in 2008.

There is little prospect for the temporary staffing industry to make significant domestic growth, according to industry consensus.

“The image of temporary staff services became so negative in Japan,” one official said.

Instead, personnel placement firms are trying to accommodate the needs of Japanese clients entering emerging markets by offering information on the latest developments in the employment situation and personnel management in their host countries.

Labor law and employment practices vary by country. So, Japanese businesses often turn to a job placement company that is well-versed in the markets they are entering.

Setting up shop overseas entails a wide range of work such as briefing sessions on job descriptions, payroll calculations and labor management.

Pasona has added two bases, one in Suzhou, China, and another in Gurgaon, India, since late last year.

Pasona now operates 34 offices in 10 regions overseas, including Taiwan, Vietnam and South Korea, as of late May, compared with 29 offices in eight regions a year earlier.

Tempstaff Co., a core company of Temp Holdings Co., Japan’s second largest manpower company, has also opened a new branch in Hong Kong, in Guangzhou, China, and in South Korea over the past year.

The expansion is designed to respond to needs from Japanese part suppliers and demands for personnel with expertise in finance when businesses establish bases.

Meitec Corp., a Tokyo job placement company specializing in engineers, is focused on staffing in China.

It operates schools in Xian and Chengdou to nurture engineers with knowledge of Japanese and Japanese culture.

From this year, the company has introduced a program that dispatches experienced engineers from Japan to give technical guidance.

Although many Japanese human resources companies are making a foray into fast-growing Asian markets, Recruit Co., the industry leader, is trying to expand its operations in the United States.

Japan and the United States represent the world’s two largest markets for temporary manpower supply services, accounting for about 20 percent, respectively.

Recruit became the nation’s largest staffing agency in 2007 after acquiring Staff Service, then the industry leader.

Recruit is now setting its sights on the U.S. market. It took over two U.S. human resources companies last year.

Recruit expects overseas sales to account for 20 percent of its overall sales in the year ending March 2013, nearly six times the current figure, and 50 percent in the future.

“We want to grow into the world’s No. 1 temporary job service company,” said Masumi Minegishi, president of Recruit.

The company plans to go public in fiscal 2013 to bolster its ability to raise capital and strengthen overseas units.

While Japanese personnel placement companies are scrambling to expand their businesses abroad, Japanese arms of their foreign counterparts are finding a niche market for growth in Japan.

Netherlands’ Ranstad Holdings, the second-largest job placement company globally, integrated its Japanese operation with Fuji Staff Inc. and I Line Corp. in July last year for a full-scale entry into the Japanese market.

“There is a potential for us to flourish in the Japanese market as there is a big gap in terms of manpower supply between declining industries and the rapidly growing sector,” an official at Ranstad said.

Adecco Ltd., the global leader based in Switzerland, shifted its Japanese operation into high gear after acquiring Career Staff Ltd. in 1999. Cashing in on its extensive network abroad, it is beefing up efforts in dispatching personnel overseas from Japan.

It also works with the association of Thai exchange students in Japan to draw up career paths for Thai students who return to their home country after working at businesses in Japan.

An Adecco official said economic globalization requires a staffing agency to manage the two-way flow of human resources, from Japan to abroad and vice versa.

By YUKO MATSUURA/ Staff Writer
  • 1
submit to reddit
Company officials involved in foreign operations attend a seminar by Pasona Group Inc. in Tokyo on June 13. (Yuko Matsuura)

Company officials involved in foreign operations attend a seminar by Pasona Group Inc. in Tokyo on June 13. (Yuko Matsuura)

Toggle
  • Company officials involved in foreign operations attend a seminar by Pasona Group Inc. in Tokyo on June 13. (Yuko Matsuura)

More AJW