Driving Japan’s Digital Transformation: How Ad-Sol Nissin Is Building Smart Cities and ICT Solutions for the Future

Japan is facing a demographic crisis, with one of the oldest populations in the world. By 2040, the country is expected to face a 12% labor shortage—an issue that will hit regional areas especially hard and place significant strain on the talent pipeline. Fields like ICT and AI remain underdeveloped, and we’re also seeing a growing reliance on overseas recruitment. How has this demographic shift influenced your talent development strategy? And to what extent do you believe companies like yours will need to depend on overseas hubs to sustain long-term growth?

First, our company is actively engaged in improving the productivity of system development utilizing AI and enhancing operational efficiency through digital transformation (DX). This effort is not only aimed at addressing the shrinking pool of engineers but also at improving the work environment and job satisfaction for our current employees. Thanks to our offices in Tokyo, Osaka, Nagoya, and Fukuoka, we’re still able to recruit talent with ties to those regions. So, while there is a broader labor shortage across the country, our hiring situation remains stable.

That said, we’re making a significant investment to upskill the engineers we do hire, particularly in advanced AI and digital transformation (DX) technologies; so they can operate at the forefront of innovation.

We want our employees to build long-term careers at Ad-Sol Nissin, so in addition to training, we’ve implemented revisions to employee compensation for three consecutive fiscal years, and this year we raised average salaries by 7%,  raised signing bonuses, and are investing in improving our overall working environment. In addition to these efforts, we are also making significant investments in offshore locations in Da Nang, Vietnam. However, depending too much on our Vietnam team comes with risks, so we’re also looking closely at how to better balance responsibilities across all our offices.

Regarding your Vietnam office, we understand you're aiming to scale it to 1,000 engineers over the medium term. Generally, when working across different countries, issues such as code quality, security, and cultural misalignment are noted. What governance structures and quality control measures do you have in place to ensure that the development work done in Vietnam meets the same high standards as your Japan offices?

The development work in our Vietnam office follows the same standards and processes we use in Japan for governance, security, and quality. To maintain these standards, members of the relevant departments in Japan visit Vietnam on a regular basis to provide guidance and support to the engineering teams there.

In addition, we bring our Japanese clients to the Vietnam office so they can directly share their expectations and insights regarding quality and security and reflect them in the development environment in Vietnam as needed. These combined efforts form a key part of the governance framework we’ve established for our Vietnam operations.

You also operate an R&D base in San Jose, California. Could you share the strategic importance of that location and how you’re leveraging it? Additionally, are there any plans to further expand your overseas presence?

Our R&D office in San Jose plays a strategic role in monitoring emerging business trends, technologies, and services. Its primary purpose isn’t to expand our business in the U.S., but rather to gather market intelligence.

In contrast, our Vietnam offices focuse on supporting IT development work required in Japan. It operates as a system development hub.

To answer your second question, we don’t currently have plans to expand beyond Vietnam and the U.S. Each of these locations has a clearly defined role, and our focus is on investing further to support and strengthen those functions. We also own a wholly-owned subsidiary called Ad-Sol Asia, which manages the Vietnam office. Should we expand further within Asia, Ad-Sol Asia will take the lead in managing any new offices.

Returning to the issue of Japan’s demographic crisis—nearly all prefectures are experiencing population decline, and it's projected that 30% of municipalities could disappear by 2050. That’s where your company stands out, as you offer digital tools that could help address some of these challenges. What role do you see ICT-driven infrastructure playing in reversing regional decline, and how can Ad-Sol contribute to this effort?

As a company involved in social infrastructure, we provide local governments with solutions based on our proprietary Geographic Information System (GIS) technology to support disaster prevention and preparedness.

ICT technologies is effective to enhance the living environment and quality of life for people in local communities. Using this technology, we're actively collaborating with universities on demonstration projects with  local governments—examples include partnerships in Utsunomiya and Yokohama. Furthermore, we are working on the redevelopment of Oimachi, Tokyo, which was selected as a project supported by the Tokyo Metropolitan Government's Smart Tokyo Chiiki Project.

Looking ahead, our key goals over the medium to long term  is to help realize a smart city. Our proprietary GIS technology will play a central role in making that vision a reality.

I’d like to touch on some of the structural challenges Japan faces in adopting new technologies. Japan currently ranks 29th in the IMD World Digital Competitiveness Ranking, and a recent survey highlighted widespread concerns about AI security and the need for clear AI governance guidelines. In this context, how are AI tools like Adsol Chat 2.0 reshaping your internal development practices and the solutions you offer to clients?

We are already using Adsol Chat which is a self-developed generative AI that began company-wide operation in February 2024 to enhance productivity. In system development, it's being applied not only to programming but also to testing, maintenance, and documentation. We’re leveraging AI across multiple areas. We also provide AI tools to our clients, giving them the freedom to use these technologies as they see fit, while continuing to use them internally as well.

As for why digitalization and ICT adoption have been slow to expand in Japan, we believe security concerns play a major role. This hesitation may stem from cultural factors unique to Japanese society that demand "perfection" and "superior high quality." To address this challenge, we are conducting research and development activities related to AI quality and reliability, primarily through our AI Research Institute. These activities include participating in the AI Quality Improvement Project at the National Institute of Advanced Industrial Science and Technology (AIST) and engaging in industry-academia collaboration with the University of Tokyo. Trust in our specialized expertise and technical capabilities has led to several successful projects, such as AI deployment support consulting and system development.  

An estimated 60% of Japanese companies struggle with digital transformation (DX), largely due to legacy systems and a shortage of skilled engineers. Your LeapX addresses these challenges by offering agile development, cloud migration, and data services. What sets LeapX apart from other DX solutions on the market, and how are you addressing the ongoing skills gap in its implementation?

To be direct, there’s no major difference between our system and others in terms of core technology. However, one important distinction is that digital transformation solutions like LeapX aren’t tangible products—they're frameworks and services that require deep understanding of the client's specific environment.

Therefore, we conduct a detailed analysis of the customer's business processes and system configurations during the implementation phase, and we customize LeapX to best fit their needs. Additionally, we offer ongoing support after deployment to assist customers in driving their digital transformation initiatives forward.

For engineers, we provide training programs, with a particular focus on education related to cloud technologies and agile development. Furthermore, through collaboration with universities and vocational schools, we are also working to cultivate the next generation of IT talent.

The characteristic of LeapX is that it consolidates the technologies and expertise cultivated in the fields of social infrastructure such as electricity, gas, and railways, enabling it to provide highly specialized solutions capable of handling mission-critical areas. We’re able to do this because we’ve accumulated years of know-how and domain-specific expertise.

Additionally, LeapX include options that leverage the capabilities of Vietnam's engineering team, which allows us to respond to client needs efficiently and meet project requirements in a timely manner.

Founded in 1976, your company has grown into a leading ICT provider. In 2025, you achieved record-breaking revenue of JPY 15 billion—a 9.8% increase. Your core business areas include social infrastructure, advanced industry, and IoT solutions. Under your “New Canvas 2026” medium-term management plan, you're also expanding into strategic new segments such as next-generation energy, smart infrastructure/life, and enterprise DX/modernization. Are there any additional segments you’re planning to enter in the near future?

The core of our business is the development of ICT systems that support social infrastructure. Leveraging the technologies and expertise cultivated in this field, we are advancing efforts to contribute to the realization of smart cities by exploring next-generation energy, smart infrastructure, and smart lifestyle solutions.

As an ICT company, we’re not building the city itself; but we’re collaborating closely with construction firms, railway operators, and power companies to make urban living more convenient and efficient. We’re leveraging the full range of our know-how, expertise, and experience accumulated over the past 50 years to contribute meaningfully to this vision. Our mission is to provide a secure environment for people’s lives, so rather than focus on digital per se, we want to use digital technology to realize that kind of society.

As you look toward further international expansion, are you seeking new global partnerships? If so, what qualities or capabilities define your ideal partner?

We’re looking to expand our network with a dual focus: one centered on Vietnam and the other on the U.S. Rather than trying to establish operations independently in every new region, our goal is to identify opportunities and pursue new business ventures collaboratively within that network.

We don’t want to limit ourselves strictly to our original business domains. Instead, we’re eager to partner with both Japanese and international companies to create entirely new business opportunities. We believe this kind of collaboration is where we can truly add value.

Your company is constantly innovating and developing new products and solutions. Looking ahead, what can the world expect next from Ad-Sol Nissin?

We have plans across three key areas. First, we’re focused on helping to realize the smart city vision. We will contribute to smart cities by leveraging our technological capabilities and utilizing ICT to promote the efficient use of renewable energy, strengthen resilience, and support disaster prevention and mitigation efforts. Second, we aim to expand the use of our GIS technology. Starting with Tokyo, we plan to release next-generation products, or introduce entirely new ones, on a yearly basis. Third, we’re continuing to grow our AI services. We are advancing the development of new AI services by leveraging the consulting expertise derived from our AI Research Institute's insights, as well as the technical skills of our AI specialists. These will play an increasingly important role in our future offerings.

As a final question, how would you concisely summarize Ad-Sol Nissin for the Newsweek audience?

We’re a company dedicated to supporting the daily lives of people in Japan through the power of ICT. And if there are other companies that share that vision, we’re always open to partnering and working together.

For more information, please visit their website at: https://adniss.jp/en/corporation/corp.html