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Overcoming Outsourcing Challenges for Japanese Startup Founders

This article is written by Matt Ainsworth from Tekkon

Outsourcing is not new in Japan; major companies have long embraced offshore teams to enhance their capabilities and efficiency. For instance, Yahoo Japan has successfully outsourced operations to Indonesia, tapping into the region’s vast and diverse talent pool. Hitachi has had a presence in the Philippines since 1993, and so on.

However, outsourcing can sometimes turn into a logistical, managerial, and even legal nightmare if not handled correctly. As someone who connects startups and scale-ups with talented remote developers from abroad, we frequently hear about or experience clients seeking our assistance to resolve issues experienced with previous agencies or development shops.

That’s why we believe it’s essential to share our experiences, to help you make more informed choices the next time you choose a tech partner. Tekkon can help you maximize the value, quality and output from working with offshore developers, managing and hopefully mitigating potential risks or misunderstandings that may arise.

Here’s how Japanese startup founders can address common risks associated with outsourcing tech development and strategies for mitigation:

TEKKON Featured - Overcome Outsourcing Challenges

Make Your Own Tech Decisions

One of the risks of outsourcing tech builds or development, often means losing control over the technology direction, decision-making, and suitability with your product and business goals.

That’s why we think it is essential to involve yourself in key tech decisions, especially those about tech stack, system architecture, and the development roadmap and process. 

Establish clear communication channels via tools (like Zoom, Slack, etc) with your tech partner, plus regular check-ins and updates will help to ensure alignment with your vision and requirements. 

Alternatively, if you’re not that tech-savvy, learning it yourself or hiring a local tech lead or finding a tech co-founder can provide on-ground oversight and ensure any outsourcing aligns with your business objectives.

Safeguard Your Intellectual Property

When disclosing your intellectual property to a third party, make sure there are clear guidelines about the ownership of the business IP, as well as having access to the code for your product or platform.

Make sure you are diligent in reviewing the IP clauses in your contracts with outsourcing partners. Ensure that your contracts clearly define the ownership of developed IP and include non-disclosure agreements (NDAs) to protect sensitive information. 

In addition, make sure you can control access privileges to your infrastructure, coding, and deployment environments. If there are any doubts, you can always revoke someone’s access to reduce the potential threat or harm they could cause.

On top of that, regular audits and external legal reviews can further safeguard your interests, so when in doubt perhaps you should seek legal advice or seek out another provider.

For example, you wouldn’t want to follow in the footsteps of these Execs in Japan who outsourced their development work to North Korean software engineers, and got caught doing it. Warning signs include inaccurate use of the Japanese language, suspicious-looking names, and names not matching payment accounts.

Outsourcing Team from TEKKON

*The Tekkon team in Nepal at their annual Tekknite event, a chance to celebrate achievements and come together as a group.

Cultural and Communication Barriers

Japan itself is a country of unique culture and language, and perhaps even more so when it comes to ways of doing business. So, when it comes to outsourcing with a tech partner, there may very well be gaps and differences in communication style and business culture.

In this particular situation, selecting development partners who adapt to your communication style and business etiquette is vital. You could even consider cultural training for both your team and the outsourced developers to foster mutual understanding. 

Tools and methodologies that support clear, consistent communication (like daily stand-ups and user stories) can bridge communication gaps and align the vision across the team both local and remote.

When it comes to communicating with the Japanese, some unique elements to be aware of in their Business culture include:

  • Nemawashi: a Japanese business practice of informally discussing and gaining support for a proposal before officially presenting it. It helps address any issues early and ensures broad agreement.
  • Indirect Communication: Responses may be non-committal or vague, such as “We will consider it,” or “That might be difficult,” which can imply disagreement or rejection without stating it outright.
  • Honne and Tatemae: Japanese concepts referring to a person’s true feelings (Honne) and the public face they show (Tatemae). While Honne is often reserved for close friends, Tatemae is used in public or formal settings. Understanding the difference is important in business to manage how personal opinions and public expressions are handled.

Quality Concerns

Suppose you’ve ever visited or even lived in Japan. In that case, you’ll note that the country prides itself in its Omotenashi approach to customer service, and the same quality standards can be said of the products you can buy throughout the nation.

As a result, it’s important to also ensure development work, whether local or offshore meets the high standards expected by Japanese markets.

One way to mitigate this is to implement rigorous quality checks and regular reporting. Ask for daily updates on progress and involve a third party to review the code if necessary. Setting clear, measurable quality standards from the start will help maintain the desired level of quality. 

Furthermore, ensuring code is tested from the point of cybersecurity is also a growing concern. As Japan has historically been the target of a large number of cyber-attacks, there is much more attention being paid to reducing vulnerabilities and bolstering security. Major Japanese brands including Fujitsu, Toyota, Sony and Line have all reported to be recent victims of cyberattacks over the past few years.

That’s why Kishida’s most recent visit to the US was crucial from this perspective. As he was able to secure a $2.9B investment from Tech Giant Microsoft into their AI and Cloud Infrastructure. Demonstrating just how serious the nation is about tackling cybersecurity and innovation going forward.

Time Zone Differences

Naturally, when working across different countries, there may be some inevitable differences in hours, affecting communication and workflow, and limiting the time for meetings.

A way to work around this is to choose outsourcing locations with similar time zones, that either overlap or adjust working hours to create core time windows where both teams are working. 

This alignment will help to ensure there is sufficient time to schedule regular meetings and timely updates, facilitating smoother project management and collaboration across your business.

Another thing to consider is the difference in public holidays, for example when Japan is off on Golden Week, Obon and Silver Week, the rest of the world still continues to work through. Meanwhile, China has Chinese New Year and similarly Vietnam has Lunar New Year in late January/Early February for almost 2 weeks. Diwali in India happens over 5-6 days around September to November.

Overcome Engineer outsourcing challenges

Navigating Legal and Compliance Issues

When working with remote developers in different countries, it’s highly beneficial if not imperative to be aware of the differences in laws and compliance.

If you’re having trouble navigating the legal landscape of a particular country, it may be worthwhile seeking legal counsel to understand the implications of international laws on your project. 

Particularly, you should consider areas like data protection and employment. Ensure compliance by having legal experts from both jurisdictions review your outsourcing agreements and practices.

Furthermore, understanding common work cultural practices can also form an integral part of retaining talent. For instance, in the Philippines, Nepal, Malaysia and many other countries workers, it is common for workers to receive a 13 month salary (including 1 month bonus), as part of their total compensation.

The Need to Go Global

For Japanese startups, venturing into international markets is not just an option but a strategic necessity to look beyond the domestic landscape. As the local population continues to age, and the birth rate declines, the shrinking market continues to erode business opportunities. 

English proficiency then plays a pivotal role in this expansion. As one of the most commonly learned and spoken languages globally, English enables Japanese founders to communicate effectively across different cultures and markets, presenting their ideas and products to a worldwide audience. 

Mastery of English is essential for negotiating with international partners, attracting global investment, and participating in international trade shows and conferences where English is the standard.

Pioneering this trend are global giants like Rakuten, Shiseido and Sony, who are investing enormously in the English communication proficiency of their Japanese workforce.

Overcoming Challenges with Tekkon

At Tekkon, we understand the unique challenges faced by Japanese startups when outsourcing tech development. Our approach is designed to support these startups in navigating these challenges effectively:

Make Your Own Tech Decisions: 

Tekkon empowers startups to maintain control over their tech decisions, our model of developer outsourcing helps founders control their IP and have full control over access privileges. We provide guidance but ensure that the final decisions rest with you, preserving your vision and strategic direction. The developers you contract with are also your resource to manage directly, while we handle all the HR functions locally.

Safeguard Your IP: 

We stress the importance of intellectual property protection. Our contracts are meticulously drafted to ensure your creations and innovations remain under your ownership, fortified by robust IP laws and agreements. We also have direct NDAs with all our staff in Nepal to protect you against any risks.

Communication and Cultural Barriers: 

Tekkon’s staff are all proficient in global use of English. Even though they cannot communicate in Japanese. They are meticulously vetted for their reliability, agility and ability to adapt to different working environments. This helps us to ensure their flexibility in integrating to your startup’s way of working, methodology and communication tools.

We also always conduct onboarding and offboarding meetings as a further step to ensure seamless integration and exits with our remote developers.

Quality Concerns: 

We commit to the highest standards of quality that Japanese companies are known for. Regular quality checks, transparent communication, and adherence to stringent quality guidelines ensure that the outsourced work meets your high standards. We can also provide external code reviews and penetration testing as an additional service.

Time Zone Differences: 

Currently, the time difference between Nepal is only 3 hours 15 minutes behind Japan, which makes it easy to work across Japanese business hours, schedule meetings and communicate and manage projects effectively.

Navigating Legal and Compliance Issues: 

As our staff work directly with you, as your own resource to manage and allocate assignments or projects to, you have ultimate control of how they work. We do not keep any client data locally, and you are providing access privileges to staff to control what they can and cannot do. 

Further to that, if you have certain compliance or legal frameworks you need to meet, our staff are adaptable enough to work towards the standards you set. If there is certain training they need to access to be compliant, we recommend you make this accessible to staff to ensure they are on board and capable of working to the standards you require.

Final thoughts:

Outsourcing to remote developers, even abroad, can be a fantastic and even life-saving experience at times when you need to quickly ramp-up development or resources. 

As long as you take the necessary precautions, make your own tech-decisions, control your own IP and communicate effectively with your tech partner, you’re well on the way to building an efficient, cost-effective and cohesive working relationship.

Ultimately, if you’re looking for an agile, cost-effective and trusted partner for your startup or scale-up, Tekkon can help you find the suitably skilled remote tech-talent. 

We not only help reduce the risks associated with outsourcing but also turn these challenges into opportunities for growth and global expansion. 

Reach out to me (Matt) or head to Tekkon to learn more about our commitment to being your trusted tech partner in your journey to take your startup to the world stage, leveraging our expertise to ensure your venture’s success in the global marketplace.

2X-5X YOUR BUSINESS IN JAPAN

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