Japan’s once-dominant carmakers face ‘pay hike’ hurdle to lure geeks

Bloomberg

Headhunter Casey Abel spent four months trying to hire a data-center architect for a Japanese automaker, including five meetings with the client — one with the top executive. In the end, the IT specialist joined an e-commerce company abroad for significantly more money.
“There’s just a massive mismatch in salaries,” said Abel, managing director at recruiter HCCR K.K., who has spent as long as a year trying to land some IT candidates. “You’ve got some engineers making 20 million yen ($170,000) a year. Then you try to fit them in the traditional manufacturer-based salary structure where it should be 7 to 9 million yen.”
Attracting the best information technologists is becoming increasingly important for Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. as they seek a bigger share of revenue from IT-driven services such as ride-sharing and cloud-based monitoring of vehicles. Nissan Chief Executive Officer Carlos Ghosn has said Japanese carmakers can’t afford to lose the “ global war for talent” to new rivals like Uber Technologies Inc. and Tesla Motors Inc.
Luring such talent requires big pay bumps in Japan because the companies are chasing the same experts that banks, tech companies and everyone else needs, said Abel. The automakers “operate within extremely strict budgets and the business is generally low margin.” Japanese companies suffer from a dearth of domestic talent and the perception their business is more “mature and slow moving” than the new wave of tech startups.
Honda said it will adopt a more flexible salary policy at its new Tokyo lab, while Nissan declined to comment specifically on pay at its new Tokyo data office. Toyota located its so-called connected-car business unit and AI research center in the US, which a spokesman said offer competitive compensation.
Japan has had the most severe talent shortages in the world since 2010, with IT professionals among the top three hardest positions to fill, according to Manpower Group’s annual market survey. The country is short of an estimated 171,000 IT staff in 2016 and the number may more than quadruple to 789,000 by 2030, according to a survey by the Ministry of Economy, Trade and Industry (METI).
That race for staff is accelerating. Nissan said in October it plans to hire about 150 engineers in Tokyo by 2018 for software, cloud computing, data analytics and machine learning. Honda starts operation next year of a Tokyo research center mainly for artificial intelligence and IT. Volkswagen AG said this week it will hire more than 1,000 IT experts, tapping high-technology sectors, gaming industry and top-level research centers, in the next three years.
Toyota last month announced its connected-car strategy, which includes building a big data center to create new business using drivers’ data such as tailoring insurance policies to drivers’ habits, and hired former US defense scientist Gill Pratt to set up and lead an AI research institute in the US.
The Japanese corporations are following the lead of US rivals Ford Motor Co. and General Motors Co. Ford established a science lab in Silicon Valley in 2012 to develop software, while GM has built two data centers since 2013 to streamline product development, manufacturing, marketing, sales as well as connectivity services.