The Secret Behind Direct Sourcing in Japan

Over the years, we’ve been asked the same question over and over again, “How do companies direct source candidates in the Japan market?” There is a certain level of mystery behind it all, one – because direct sourcing itself is a new concept in this market, and two – global HR organisations are often not in line with the Japanese labour market. To shed some light on the matter, we spoke with leading global IT firms which are known to be the pioneers of name gathering, approaching, and successfully bringing onboard some of the most talented individuals directly, and dare I say, without a recruiting agent. We found that although it is simple in concept, the difficulty comes with the planning and implementation of it all.

The Good News

Let’s start with the good news: if successful, a direct sourcing strategy has the potential to save tens – if not hundreds – of million yen. Using simple arithmetic if one in-house recruiter hired 12 manager level employees using internal resources, 12 x 10M (salary) x 35% (standard market fee) = 42M – 10M (salary + benefits of the in-house recruiter) we’re looking at a savings of 32M yen. If we add additional in-house recruiters, or increase their productivity, we see how this could make economic sense for many global organisations. Another benefit to having an in-house recruiter is that a recruitment license is not necessary, which in Japan has clear and specific requirements including an office that’s bigger than 20 square meteres, taking a recruitment license course, registration of the company, and capital upfront.

The Bad News

What can outweigh the 32M yen in savings, you say? Alot, actually. First of all, the labour market in Japan is generally slower than many other countries, as many candidates prefer stability (i.e. lifetime employment) over career development and/or a salary increase. When candidates do explore their options, they are careful and sensitive, and they expect a high level of service. The best recruiters in the market know that these trusting relationships with candidates are not built overnight, so they expect a long burn, rather than instant wins.

It is also important to note that the most successful companies to implement direct sourcing are also the most well-known IT companies in the world; therefore, they have the benefit of a powerful brand. In many cases, these organisations are lucky enough to be reactive to applications received, simply managing the recruitment process, and rarely needing to approach candidates directly in a form of a cold call. So if your company isn’t a consumer recognizable brand, a broadcasting strategy is required before anything else. The most challenging aspect of all in direct sourcing might be finding an internal recruiter who understands the intricacies of the Japanese market, the 360 degree recruitment process, the bilingual language skills, and has the direct sourcing experience, because again, this is new to Japan and is for the most part limited to the IT industry.

The How

The simplest and quickest way to begin direct sourcing might be finding that in-house recruiter with the experience mentioned above. There aren’t many in the market, so prepare to pay top dollar, offer a unique career development opportunity, and allow several months to identify and woo them. Expect counter offers, and make sure they are engaged after joining the firm. Give them a budget for branding and a CRM system, and most critical of all -the freedom to be creative and run the show.