Keiichiro Yanagi is senior executive vice president at NTT DATA Corporation, one of the world’s top 10 IT services providers, headquartered in Tokyo, Japan. A 34-year veteran of the company who joined straight from university, he is now a board member with responsibilities for global HR and corporate strategy. Here he explains some of the challenges large Japanese companies face when transforming from domestic to global enterprises, and how NTT Data is successfully addressing these issues.
NTT Data has grown from being a company focused on the domestic market in Japan to become a multinational player with a global presence. What were some key milestones along the way?
Keiichiro Yanagi: The company has achieved 30-plus years of unbroken growth and is still growing like a start-up, except that we’re not a start-up. This fact is a good representation of our journey overall and something that I am very proud of.
We always planned that our overseas growth would evolve through three distinct stages. The first was that we would increase our physical presence outside Japan, which we did with the help of targeted acquisitions in the U.S. and Europe. The second phase was that we would leverage our growing international presence to become a “recognized global brand,” and aim for 50% of our overall revenues to come from outside Japan. The third phase would see us becoming a “trusted global innovator,” with the majority of our overall revenues coming from overseas.
Earlier this year, when publishing our fiscal 2017 results, we announced that we had completed the second phase of this evolution, having become a brand recognized in many countries beyond Japan, with overseas revenues heading towards the 50% target. We are now, therefore, firmly focused on the third phase—on becoming a “trusted global innovator”—a phase that we expect to last until around 2025.
Our acquisition of Dell Services in the U.S. was obviously a major milestone along this journey. More than two-thirds of our employees now work outside of Japan; our focus from now will be on leveraging that overseas presence to drive up global revenues, and to become a trusted business partner of clients throughout the world.
How has your competition changed as you’ve evolved from a predominantly Japan-focused IT services company into more of a global provider?
KY: When we talk about competition, there are obviously two aspects: competition for business and competition for talent. And the former clearly influences the latter.
Our business competitors 10 to 15 years ago were generally other large Japanese IT service providers in Japan; most of them, like NTT Data, offered lifetime employment and on-the-job training from scratch. That’s clearly changed; now we find ourselves increasingly competing with U.S. and European companies and with newer IT companies in fast-developing countries like India. Our prospective employees assess us, and the opportunities we offer, in comparison with those companies, which means having to adapt our hiring and retention processes, especially in Japan.
How is NTT Data’s management of its human resources evolving in response to your growing presence in the U.S. and other overseas markets?
KY: At NTT Data, we give our overseas subsidiaries a lot of flexibility in terms of how they recruit, manage, and remunerate their staff. We certainly don’t impose any Japanese conventions on them. The things that motivate employees and inspire performance vary from country to country, so one size definitely does not fit all. This isn’t just a “Japan versus the rest of the world” comparison—there are significant differences in workplace culture between the U.S. and Europe, and between individual countries in Europe. The same can be said about Japan and the rest of Asia too.
We recognize that becoming global doesn’t mean that our employee management style in Japan will change overnight. We see it more as a gradual evolution. Large companies like NTT Data have traditionally offered lifetime employment, with many employees joining straight from college and spending their entire careers there. Staff turnover is low and mid-career hires are rare. But that is changing, particularly in the technology industry, and so the gap between the Japanese employment model and the U.S. model is narrowing.
Japan is also no different from the U.S. in that our brightest and most creative young minds tend to be more restless and will often seek opportunities to further their careers in other companies. Although NTT Data’s current annual turnover of staff is just 2% in Japan, with the increased influx of younger employees we see this rising. We will undoubtedly see an increase in mid-career hires to replace those who move on, and our processes will evolve to handle that.
Our central management takes a long-term perspective to growth—not just on a quarterly basis. For example, we foster a corporate culture in which local management are encouraged to implement projects that contribute to and stimulate the wider organization. These projects add to the attractiveness of the company, which in turns supports our talent acquisition in an era when competition is severe.
And although much autonomy is given to these leaders of overseas group companies, we are all connected through shared values. That’s a fundamental and, I think, unique concept that underlies diversity at NTT Data.
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