Connecting Bytes to Bright Business

To begin, I would like to talk about the current state of digital transformation in Japan. Back in the 1990s and 2000s, Japan was recognized globally for its hardware infrastructure, electronics, robotics, and entertainment industries with companies such as Mitsubishi, Sony, and Nintendo leading the way. However, compared with the United States and Europe, Japan has been slower in adopting software-as-a-service and cloud infrastructure. For instance, in the U.S. and Europe, roughly 90% of companies have already adopted cloud services, whereas in Japan the figure is closer to 60%. That said, change is underway. Many new companies are emerging to solve social challenges and to improve efficiency in Japan through digital transformation and IT evolution. While the pace of cloud adoption still lags behind Western markets, the momentum is shifting. Against this backdrop, how do you perceive the current trajectory of Japan’s digital transformation and digital evolution?

That is an excellent question. To answer it, I should begin by noting that the term “DX,” or digital transformation, has many different interpretations in Japan. Depending on who you ask, it may mean very different things. For some, simply digitizing a scheduling process or moving a paper-based workflow onto a system is referred to as DX. In many cases, people equate digitization itself with transformation.

However, in my view, true digital transformation goes beyond basic systemization. This means selecting the areas that define a company's core business and have commonalities with other companies, leveraging common platforms,  and internalizing and innovating in the areas that define a company’s core business—the parts where differentiation really matters.

Two major factors have accelerated the adoption of cloud and SaaS in Japan. First, there is the undeniable shortage of human resources. Second, the COVID-19 pandemic forced many companies to adopt remote work. This created a strong appetite for cloud-based services that could support remote collaboration and efficiency.

As a result, companies increasingly recognize the importance of focusing resources on their unique, value-creating activities, while relying on shared SaaS platforms for functions that do not require differentiation. I believe this mindset—that businesses should invest in their strengths while embracing common platforms elsewhere—is now becoming much more widely understood in Japan.

TechMatrix Headquarters

You mentioned the shortage of human resources, which affects many industries in Japan, especially service-oriented ones such as tourism, but also B2B services like yours. On one hand, this represents an opportunity for you to deliver solutions that help companies improve efficiency. On the other, it poses a challenge for your own company in terms of securing sufficient talent. Could you tell us about your strategy for attracting and retaining the right people at TechMatrix?

Certainly. Let me first explain our business model, because it shapes how we approach talent. Unlike some companies that develop fully bespoke systems for each client, our approach is to create solutions that can be used broadly across industries—such as healthcare and call centers—so that we can deliver scalable impact. In the context of DX, we focus on developing those common platforms with a high degree of specialization, rather than reinventing the wheel for every client.

One of the strengths of our approach is that we do not limit ourselves to the ideas of a single client. In healthcare, for example, we serve more than 2,500 institutions. We continuously evolve our solutions by listening to feedback from across this broad client base. This allows us to create systems that go beyond the imagination of any one customer, and we take pride in that. Moreover, from a national perspective, Japan cannot afford inefficiency by building custom systems one by one. Developing shared, specialized platforms is far more effective for society as a whole.

Now, turning to your question about talent. Recruiting engineers has become increasingly competitive in Japan. The market is crowded with highly attractive employers—from established giants such as NEC and NTT to innovative startups—so competition is intense at every level. Simply raising salaries is not a long-term solution, because there will always be companies that can offer more. Compensation must, of course, be competitive, but the real differentiator is whether we can offer work that is challenging, meaningful, and provides opportunities for personal growth.

At TechMatrix, we strive to provide exactly that. For example, in areas such as cybersecurity and software testing tools, we introduce cutting-edge overseas technologies into the Japanese market. This allows employees to work directly with world-class innovations. At the same time, in fields such as healthcare, education, and call centers, we develop our own solutions in-house. Engineers have the chance to design, build, and continuously improve systems that directly impact people’s lives.

Looking ahead, the utilization of AI and data is a major theme for us. Industries like healthcare and call centers generate vast amounts of data that can be harnessed to create smarter, more effective solutions. We want to attract people who are excited by the idea of building the next generation of data-driven services and solutions. In short, we believe that offering challenging projects, meaningful impact, and room for growth is the best way to secure and retain top talent.

Many Japanese companies are looking overseas to counterbalance the shrinking domestic market caused by demographic decline. Some expand into Southeast Asia because of geographic proximity and growth potential, while others target the U.S. due to its sheer market size. How do you view this situation? Which overseas markets do you see as most promising, and which of your services or solutions are you preparing to introduce internationally?

You are absolutely right—the demographic trend in Japan is clear, and the domestic market will inevitably contract over time. That said, our current businesses, such as cybersecurity, still have significant room to grow within Japan. We are far from reaching market saturation, so there is plenty of opportunity ahead domestically.

However, when we look to the future, international expansion becomes essential. For our proprietary solutions, particularly in healthcare and call centers, we have already begun to expand into Southeast Asia. The reasons are straightforward: the region’s population is growing, its average age is relatively young, and economies are expected to expand rapidly. These fundamentals make Southeast Asia an extremely promising market.

In addition, Japanese business practices—such as attention to detail, reliability, and what might be called our culture of “hospitality”—are well received in Southeast Asia. We believe there is strong potential to introduce our healthcare and service-related solutions there, tailored to local needs but built on Japanese standards of quality and trust.

tsumugino

PSP Corporation

NOBORI

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You also mentioned collaboration with overseas providers. Looking ahead, how do you see the balance between developing your own proprietary platforms and partnering with global technology leaders?

Based on our experience so far, I believe the right approach is a combination. In reality, Japan has not produced many of the fundamental technologies of IT that serve as global platforms—things like operating systems, networks, or even core cybersecurity tools. These technologies often come from the U.S. or, in the case of cybersecurity, from countries like Israel. In many cases, those international solutions are simply more advanced.

Where Japan excels, however, is in the application layer—adapting technology to real-world use cases and embedding it into workflows with the usability and precision that Japanese users expect. That is exactly where we focus our in-house development. For instance, our healthcare and call center systems are designed specifically for the Japanese market, taking into account cultural preferences, local workflows, and user expectations. We believe this is where our proprietary development brings the most value, while we continue to leverage best-in-class overseas technologies as the underlying foundation.

Let me turn to AI. Recently, you have announced initiatives integrating generative AI into your solutions, for instance in call centers, with features such as automated transcription and reporting. In healthcare, you are also exploring AI applications in diagnostics. How do you envision the role of AI in your future solutions?

This is an important point. I often hear poor advice given to executives along the lines of “You must build a business because AI exists.” That is not the right approach. AI is not the goal; it is a tool. The starting point must always be a clear understanding of the problem we are trying to solve.

For example, in call centers, the goal is to reduce operator workload and improve efficiency. In medical imaging, the question is how AI can assist doctors by highlighting patterns or anomalies that support faster and more accurate diagnoses. In both cases, the value of AI lies in how well it integrates into existing workflows and genuinely helps professionals perform their jobs better.

By embedding AI thoughtfully, we can move beyond simply “selling a system” to delivering solutions that actively support users in their daily tasks. That expands the value we provide: we are no longer just a technology vendor, but a partner in improving operational outcomes.

Cybersecurity Solutions

Finally, as adoption of your solutions grows, what steps are you taking to encourage clients to adopt your cloud-based platforms, especially in sensitive fields such as healthcare and call centers where security is paramount?

We are very clear in our strategy here. We provide our applications as SaaS solutions on the cloud. Delivering them on-premise would impose unnecessary burdens on customers, requiring them to handle maintenance and limiting their access to the latest features. With cloud-based solutions, clients can simply connect and start using the system.

Some customers still express concerns about security in the cloud. However, in our experience, on-premise systems are often less secure, because customers may not have the resources or expertise to maintain proper defenses. In reality, a professionally managed cloud environment is often far safer.

Over the past two decades, this shift has transformed our business. Since 2020, our revenues has grown more than double. The biggest driver of this has been the transition of our licensing model to a subscription basis. This not only ensures recurring revenue but also aligns incentives: we succeed when our clients succeed.

Looking ahead, we will continue to invest in cloud-based delivery, robust cybersecurity, and AI-driven enhancements, so that our customers can benefit from reliable, scalable, and continuously evolving solutions.

For more information, visit their website at: https://www.techmatrix.co.jp/en/

Medical Systems Business: https://www.psp.co.jp/

EdTech Business: https://tsumugino.jp/