TT-576 -- Cloud-based Call Centers, e-biz news from Japan

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A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, August 01, 2010 Issue No. 576


- What's New
- News
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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According to the Nikkei this week, outsourcing giant Adecco
and NTT East are working on the development of a
cloud-based call center application that allows housewives
and retired people to work from home as call center
operators. Adecco reckons that using this system they will
be able to sign up around 1,000 remote employees over the
next 3 years.

The Nikkei says that Pasona is starting a similar service
in the next month or so, and plans to have about 200
operators on their network in the first year.

This news is of course is just the latest installment of
the ongoing saga by call centers in Japan to try and reduce
costs. Whoever gets it right stands to reap rich rewards,
because the call center business in Japan is significant.
According to JETRO, the Japanese call center and related
business sectors were worth JPY312bn in 2004, and we think
they must surely be worth at least 50% more by now.

For example, Moshi Moshi Hotline (a publicly listed company
and so we have the numbers), recorded revenues of JPY55.8bn
with 20,000 staff/operators. Other major players are
Bellsystems24, now in the hands of Bain Capital, with
around 30,000 operators; Transcosmos with 16,000 employees
and sales of JPY151bn; and Pasona with 5,000 employees
and sales of JPY183bn.

[Continued below...]

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[...Article continues]

Many companies have tried to find a way to make off-shore
Japanese language call centers work. After all, if you can
get telephone assistance in English for 30% of the cost by
moving to India or the Philippines, then there must be
somewhere that you can do it for Japan as well, right? But
the problem is that Japanese customers want to hear someone
who sounds Japanese or they don't want to talk to them.
Unlike the cosmopolitan environments most other places in
the world, foreign-sounding Japanese speakers are still
regarded with suspicion or impatience by the general public
when being cold-called over the phone. First of all Japan
is a face-to-face culture and phone solicitations are not
well regarded, and so to have someone not Japanese to be
doing is just rubbing salt into the wound.

So if there is going to be off-shoring, it needs to be with
Japanese operators. The problem then is to convince
suitable individuals to work in such remote locations and
of course to take the much lower salaries that call centers
abroad will pay. In the last ten years a number of foreign
and Japanese companies have tried to get Japanese call
center personnel to move to Dalian, China, on the basis
that the city is already Japanese citizen friendly and that
Japanese-speaking Chinese employees are available to assist
the Japanese staff with preliminary phone calls or
follow-up paperwork and reporting so that the Japanese
native speakers can be more efficient.

Recruiters approaching candidates for Dalian would
invariably focus on better working conditions and lower
costs of living. However, despite their best efforts, we
don't know anyone running a proper off-shore call center
business out of Dalian that isn't somehow being propped up
with other work or with internal group business. Several
companies say they are, but they then have gone on to set
up subsequent call centers back in Japan -- a clear
give away that things are not going as well as the PR
people say. Instead, most of the work in Dalian appears to
be more data entry and other non-spoken Business Process
Outsourcing (BPO). In these areas it is a viable

So what's needed is a place off-shore where Japanese want
to live and will willingly work for lower salary. Most
likely they will already be in that location for reasons
other than a job -- such as education, family commitments,
or even retirement. It was no doubt with this thought in
mind that IBM some years ago set up what seemed the ideal
off-shore location -- in Brisbane, Australia, putting
young working holiday makers from Japan to work where they
might otherwise not have found anything.

Certainly there was no shortage of candidates, with over
10,000 Japanese a year going to Australia on Working
Holiday visas at the time. However, what we heard is that
because most of the travelers were there for a good time,
IBM found it hard to find quality staff who would show up
on time and stay with the program. We don't know if that
call center is still going now but it certainly didn't get any

This is actually the same problem facing call centers in
Okinawa now. Although the work ethic is a bit better, the
population of young people on the island who want to work
in call centers is limited and the many mainland kids down
there are there for the surfing and beach parties. Indeed,
they know that getting a job is difficult and therefore they can
draw unemployment benefits. Those companies trying to make
their Okinawa call centers work are finding that they are
either having to transfer staff down from other parts of
the country, or are paying more than the going rate for
other jobs, so as to get people to stay.

One large call center company that has made a big
commitment to Okinawa is Transcosmos. The company has
decided that the best way to keep employees committed is
to give them technical training and other benefits that
the young employees might otherwise have to go to Tokyo
for. For them at least this seems to be working and they
continue to grow apace, with about 3,000 employees in and
around Naha.

The going rate for call center operators (generally
inbound, not the harder-to-do outbound) in Okinawa is
around JPY150K-JPY180K per person per month, about
JPY100K cheaper than paying for the same job up here in
Tokyo. With that kind of saving, not only Transcosmos but
also other players are persisting with Okinawa.

So if employing young adults for call centers seems to be
a problem in most places, the answer is possibly with
using other age groups who may have a stronger sense of
responsibility and who can communicate more appropriately.
This is where the cloud computing technology being
developed by Adecco and NTT East has promise. The two
companies are targeting housewives who, because of the
ongoing tough domestic business environment are
underemployed, and who want to work and are willing to do
so from home while the kids are at school. No office means
big savings for the call center companies.

Providing the Adecco/NTT can create a system which can
seamlessly know operator's schedules and hunt available
operators quickly, then from a customer's point of view they
might have a similar experience to a professional facility
taking the same call. However, if some of the home-based
operators have babies or dogs, then the customer experience
might be unpredictable.

Also, it is highly likely that because the housewives will
all want to work the same core hours, whereas most outbound
calling to consumers happens after hours, then there will
still be a shortage of people wanting this kind of work at
the hours that they are needed.

The answer to "cloud-sourcing" after hours operators is to
do it outside Japan, taking advantage of time and lifestyle
differences. For example, there are large communities of
underemployed Japanese housewives and retirees in places
like Singapore, Malaysia, London, and Los Angeles, who
because of the lower costs or family commitments, may be
willing to act as call center operators from home. Indeed,
there are almost one million Japanese registered as living
abroad, which includes hundreds of thousands of retirees
and housewives. All these locations have good network
infrastructure and could support a cloud-based approach to
IP calls and call redirection.

From this perspective, we don't see the conventional
destinations of India, China, and the Philippines as being
suitable for call center off-shoring. Instead, it's going
to be places that Japanese have naturally aggregated for
personal reasons, and Adecco/NTT East's new system may be
just the ticket to bring those people back into the

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+++ NEWS

- More Chinese tourists arriving
- More Hondas built in USA than Japan
- U.S. games company scores cool US$150M from Softbank
- Takeda profit slumps 43.1%
- Battery-powered bikes more popular

-> More Chinese tourists arriving

The recent easing of Chinese tourist visa requirements has
had the desired effect and according to the Japan Tourism
Agency, visas issued in July to individuals coming to Japan
soared 560% over a year earlier. Final numbers are not yet
in, but it appears that around 7,500 people will travel to
Japan. ***Ed: This is still well short of the overall
goals, amounting to just 100,000 extra tourists annually,
so we expect this number to jump at least another ten
times. The big question is whether this new wave of tourists
spend at the same prolific rate as their wealthier
compatriots have been?** (Source: TT commentary from, Jul 30, 2010)

-> More Hondas built in USA than Japan

In fiscal Q1 this year, Honda built 260 more vehicles in
the USA, or 236,819 cars in all, to possibly mark the first
time that the company has seen production in a foreign
market surpass its Japanese one. Apparently if calendar Q1
and Q2 production figures are combined, Japanese production
is still slightly ahead. Whatever the case, this is all
good news for Honda and they announced that first-quarter
revenue jumped 18% to JPY2.361trn, with net profits of
JPY272.4bn, meaning that the company blew past analyst
expectations of a net profit of JPY150bn. (Source: TT
commentary from, Jul 31, 2010)

-> U.S. games company scores cool US$150M from Softbank

Online games company Zynga, the owner of the hugely popular
Farmville Facebook game, has received an investment of
US$150m from Softbank as part of an agreement to create a
j/v to service the Japanese market. It seems that Softbank
may be planning to match the game library from Zynga with
its Yahoo Japan franchise, which has about 24m registered,
active users. ***Ed: No doubt a China play won't be far
behind.** (Source: TT commentary from, Jul
29, 2010)

-> Takeda profit slumps 43.1%

If you are wondering why Japanese pharma companies are
paying such high prices abroad for foreign competitors, at
least part of the answer can be found in the major slump in
Takeda Pharmaceutical's earnings this last quarter. The
company said that its net profit for fiscal Q1 is down a
massive 43% due partly to an expired US patent on a major
product, the ulcer drug Prevacid, and partly because of the
strong yen. (Source: TT commentary from, Jul 30,

-> Battery-powered bikes more popular

While sales of regular pedal-powered bicycles in Japan
dropped yet again, to 9.67m units last year,
battery-powered bicycles are selling well to housewives and
others, and enjoyed a 16% rise to 365,000 units in 2009.
This is significant because while the average pedal-only
model sells for just JPY10,800, while the battery-powered
units sell for an average JPY63,000. The Nikkei reckons
that Japanese battery-powered bicycle makers will start to
focus on Europe as their next major market, and demand is
expected to reach 1m units a year. (Source: TT commentary
from, Jul 28, 2010)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


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Entrepreneur's Handbook Seminar 18th of September, 2010

If you have been considering setting up your own company,
find out what it takes to make it successful. Terrie
Lloyd, founder of over 13 start-up companies in Japan,
will be giving an English-language seminar and Q and A on
starting up a company in Japan.

This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally
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In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

*** In TT574 we wrote about Japanese companies taking on
Chinese interns so as to train them and eventually send
them back to China to represent the interests of the
companies. However, a reader points out that while some
forward looking firms may be doing this, many mainstream
players are still not committed to the China market.

=> Reader comment:
One paragraph in your Take this week mentioned Japanese
companies hiring Chinese with the intention of sending them
back to China. You may be interested to learn that in
(fashion) retail, except for Uniqlo, most Japanese
companies are doing poorly in China. One good example is
Isetan. My luxury brand clients all refused to open a store
in a shopping mall where Isetan is the department store
operator. Also, although opportunities abound whenever I
contact Japanese companies like FrancFranc, Peach John,
etc., about China, they all shy away from the idea with a
“thanks, but no thanks attitude”.

This report sums up the issues nicely


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