Leverages is boosting productivity, nurturing talent, and expanding internationally to build the workforce of the future
Japan is facing a significant demographic shift, with the world’s oldest population. This ongoing trend is leading to huge staff shortages and production bottlenecks, and by 2040, there is expected to be a worker deficit of 11 million people. These challenges pose a dual dilemma for Japanese companies, with difficulties in hiring skilled talent and a shrinking domestic market for their products. Companies like Leverages will be at the forefront of addressing these issues. How has this demographic challenge impacted the work of Leverages and other HR enterprises?
The issue of the aging workforce is something that Japan has been aware of for many years. From the founding of our company, we knew that one of our main challenges would be finding a way to tackle this issue. Understanding the decline in Japan’s aging workforce is the first step. To deal with this issue, we must find a way to increase productivity. To do so, we have three strategies, and we have positioned our businesses accordingly.
The first strategy to increase productivity is the strategic positioning of our resources. The different companies that focus on this strategy make up our first grouping. They include Levtech, Career Ticket, Leverages Global Support (LGS), Levwell, WeXpats, Leverages M&A Advisory, and Nalysys. All of those companies are responsible for the strategic positioning of resources.
The second strategy that we have adopted is to increase manpower. For that, we have a three-pronged approach. The first is to attract foreign workers. The business that caters to that is Leverages Global Support (LGS). The second approach is to focus on education. Levtech, LGS, and our Levwell Schools for nursing care are responsible for this approach. The third strategy is to increase the number of healthy workers in the workforce. Leverages Ventures and Levcli are the companies that focus on that initiative.
When it comes to educating the workforce, we have four school facilities, with our school for educating engineers located here in Shibuya. LGS has also established a Japanese language school in Vietnam, and we are planning to establish a Japanese language school in Indonesia. Moving forward, our goal is to establish Japanese language schools across Southeast Asia. Our Levwell schools, which focus on nursing care for the elderly, are located in Shinjuku, Tokyo, and Saitama, and moving forward, we plan to increase the number of our nursing schools as well.
Our efforts to improve the health of the workforce are done through a venture capital business structure. One aspect of that is working with internal cells and cellular growth. For example, we extract somatic stem cells and inject them into the body. Levcli is our online clinic platform that supports and provides services for areas lacking medical services and facilities. In Japan, the western parts of the country have better medical infrastructure and facilities than the eastern parts. One of the main reasons for this is that there are more medical schools in the western parts of Japan, and this has led to the imbalance that we see today. To help address that imbalance, we are looking to strengthen our Levcli online medical services and provide the infrastructure that is lacking in some rural areas. Furthermore, we are also planning to cater our Levcli online platform services to foreign workers living in Japan who may struggle to communicate when meeting doctors due to the language barrier.
DX is also very important in addressing the issue of the aging workforce and increasing its productivity. We are currently increasing digitalization, and the businesses that are catering to this initiative are Levtech and Nalysys, which are our HR tech tools. Nalysys utilizes psychological information to find ways to decrease the rate of workers who leave their careers. It focuses on increasing engagement, motivation, and morale within the workplace. While Japan is currently facing labor force shortages, other countries will soon be in a similar situation. Moving forward, we hope that these tools can be of use to other countries as well.
One of our tools that I would like to mention is our OneConne online medical platform, which helps assess and manage inpatient and outpatient information once patients are discharged from the hospital. OneConne manages all of the data that is involved.
As you mentioned, many of these technologies will be required by many other countries moving forward. The reality is that while Japan is very much at the forefront of the aging population and declining demographic trend, it is by no means the only country facing these issues. For example, South Korea today has the lowest fertility rate in the world, and most European nations have already been experiencing demographic decline for the past five years. Even developing economies such as China are being increasingly pressured by these types of challenges. This is leading many experts and investors to argue that Japan has a chance to develop solutions to these pressing issues ahead of other countries. Do you agree with the argument that this is an opportunity for Japan? Secondly, looking at your portfolio, which technologies or solutions do you believe can be scaled to global markets to address this global challenge?
I believe that all of our initiatives and technologies can be used globally to address these challenges. That is especially the case when it comes to our HR tech tools, as they are easy to sell and have a strong global marketability. We would like to start from there and see how we can expand further in the future.
You mentioned that you are also focusing on introducing foreign talent to Japan, which is increasingly becoming an important theme. Even the Japanese government understands this and plans to attract around 800,000 foreign workers, mainly in engineering and IT-related fields. This, of course, presents a series of challenges. For people moving to Japan, the challenges include understanding Japan’s unique culture and language, navigating the complex job market, and taking all of the bureaucratic steps. On the other hand, it can also be a challenge for Japanese companies to acclimate and create a working environment that is suitable for the introduction of foreign workers. What services do you offer to help make this transition as smooth as possible from the point of view of both the employer and the employee?
We provide services to cater to the recruitment of foreign workers for jobs that are not only high-level engineering-based jobs but also non-desk worker jobs for which there is a huge demand in Japan. We are looking to strengthen our business in this regard as well. These workers are required for physical labor, whether at construction sites, hospitals, or in the services industry. However, when it comes to the government’s goal of attracting 800,000 workers, we still have a very long way to go.
We are currently analyzing the data alongside many company presidents and those involved in AI to see what would be a realistic scenario to make this goal of 800,000 workers by 2040 possible. Right now, with the way things are going, it would be great if we could reach even half of that figure. It is quite difficult at the moment with the resources that are being applied.
Leverages was founded in 2005 with a focus on human resources. One of your highlights is the fact that you have been rated as a great place to work in the rankings for six consecutive years. Can you run us through the strengths of your company and what makes you what you are today?
Our greatest strength is that we have a lot of highly motivated staff. In Japan, the need to improve work-life balance is an issue, and we are seeing great efforts being made to do so on the bureaucratic level as well. However, we have gathered a group of people who really believe in the value of work. Our staff work hard and enjoy doing so. We have been able to develop a strong work culture and working environment made up of highly motivated individuals who are recruited from the top schools not only across Japan but also globally. They are people who want to improve, and we provide them with responsibilities early on. This has allowed us to create a working environment that is difficult to find in other companies.
We touched earlier on your business segments. Which economic sectors do you believe are most in need of your services in the future, and which sectors do you imagine your company servicing by 2030?
I believe that Levwell will be in great demand moving forward as the nursing and medical sectors are looking to grow significantly. We see a lot of growth potential in those areas. Also, supporting the recruitment of foreign non-desk workers is another business area where we see growth potential. By 2030, these two elements will be in high demand.
Levwell was key to your financial success in 2023, with JPY 114.9 billion worth of sales, and in the past three years, Leverages has doubled its growth. What are the company’s financial projections for the next three to five years, and how does Leverages identify and evaluate opportunities for new business ventures beyond the medical field and beyond what you do now?
According to our financial projections, we expect Levwell to continue to grow in the next few years. Outside of the medical field, HR services for non-desk workers is the area that we predict further financial growth. as the average price per individual user will continue to increase. However, for us, the increased demand for introducing new talent will be a great business opportunity and drive our numbers higher.
One of the things that we found very interesting was the international push that you have been making in recent years, having opened subsidiaries in Mexico, India, and the ASEAN region. Furthermore, you opened your first US subsidiary earlier this year. Firstly, why did you decide to take Leverages Recruit internationally, how important will that be for the company’s growth, and are there any particular regions or markets that you believe are more strategically important for your growth strategy?
Right from the start, we knew that we would need to have an international foothold due to Japan’s declining demographic. We also wanted to internationalize and do business overseas as well. That was our motivation from the beginning. The strength of the global market has a great impact on our business, and when it comes to growing our company, the North American market will be very important. That was why we set up subsidiaries in the US and Mexico. We are also looking to expand to Europe in the future. Those are the regions that we want to focus on due to the scale of the markets in those locations.
In Asia, our strategy is first to increase our Japanese language schools in the region. From there, we will be able to drive the number of foreign workers that can be introduced to Japan.
The acquisition of your global Career partners in the US was part of your strategy to enhance your market influence in the US for staffing and recruitment. Can you run us through the ambitions you have for your global Career partners and the strategy you have implemented to build those partnerships? Are you seeking any future partnerships domestically or internationally, and if so, what form will those partnerships take?
When it comes to our business in Japan, China, and Korea, most of our clients are in the manufacturing industry. We believe that we can scale and utilize the business model that we use in Mexico to increase our business in Asia. When we expand to Europe, the strategy will be to transfer our people to support the industry there. In the US, there is a demand for medical-based workers and the outsourcing of nurses. We will do that through business acquisitions. Those are the strategies we will employ as part of our international expansion.
Do you have any targets in terms of M&As that you can share with us?
We are still in the research phase, and right now, we are collecting data.
There is a high demand for IT engineers, with the job application ratio at 10:2 as of June 2024. We know that Leverages tackles these issues by nurturing new talent through initiatives such as Levertec College, which is a programming school for engineers, and Levertec IT, which streamlines job placements. What differentiates Levertec from initiatives from other companies? What makes it the go-to?
We began Levertec around 20 years ago. At that time, there was a level playing field, with Recruit being one of the big players. However, they were catering to all of the different sectors on a wider scale, and there was no specialized recruitment support for smaller and middle-sized sectors. We saw that there would be huge potential in creating a platform that catered to specific fields, such as the engineering or nursing sectors, for example. That was the initial reason for starting the company. Also, I myself come from an engineering background and therefore knew what engineers would be looking for. This gave us a solid understanding of what would be needed, and we were able to provide career counseling support as well.
Please imagine that we will return to interview you again in 2030 at the start of the new decade. What would you like to have achieved by then, and what would you like Leverages to look like?
I envision that by then, Leverages will be three or five times bigger than we are today. I believe that this is a very achievable goal for the next 6 years. Right from the start, our company motto and goal has been to create the next generation. We are a highly competitive company on the frontlines of revitalizing Japan, and going forward. We hope to continue to serve as a pillar of support for the Japanese economy.
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