Transforming Japan’s Corporate Backbone: Business Brain Showa-Ota’s Comprehensive Cycle Solution to Modern Operation Challenges

Japan is facing a significant demographic crisis, with the oldest population in the world. This is affecting production and creating serious staffing challenges, with forecasts predicting a shortage of 11 million workers by 2040. How is this demographic shift impacting your company and the businesses in your portfolio?

Japan’s declining population presents significant volatility and uncertainty. While the population is expected to decrease substantially in the future, we see this as a business opportunity. Since our company’s foundation, we have focused on helping businesses optimize their processes and implement system automation to enhance efficiency.

Today, companies are prioritizing the allocation of resources toward direct functions rather than indirect functions, and we have been supporting this shift for many years. Our business is built around three core functions: consulting services, system implementation, and BPO (Business Process Outsourcing) support —which work in tandem to support our clients’ management accounting. We refer to this as the BBS cycle, and it forms the foundation of our operations. Such an initiative is rare among Japanese companies. This unique approach is our strength, allowing us to address Japan’s shrinking workforce and contribute to solving broader social challenges. However, the declining workforce is also a challenge for our own company. To continue growing, we must focus on both recruitment and the development of our existing talent.

As you mentioned, companies are increasingly adopting AI, automation, and cloud-based services to optimize their operations. This shift is also reshaping workforce requirements, as employees need to upskill and reskill to adapt to new technologies. The World Economic Forum (WEF) has projected that by the end of 2025, 40% of the global workforce will require reskilling. How is your company preparing to upskill and reskill your workforce to ensure they can continue delivering high-quality services in this evolving business environment?

Unlike in Western countries, Japan faces the challenge that employees often do not take a proactive approach to learning after joining a company. While many companies do provide training programs, these are often top-down in nature, and few employees engage in learning on their own initiative.

Our company has long specialized in accounting systems, and approximately 50% of our employees are IT engineers. We believe that, in a field where technology is evolving rapidly, IT engineers must possess the ability to proactively seek out and acquire new knowledge. To support the autonomous growth of employees who take initiative in their learning, we have created an environment where engineers are free to experiment with AI. As a result, some engineers have taken on the role of AI mentors, sharing their expertise with colleagues and fostering a culture of knowledge exchange.

One of our key initiatives is hosting AI hackathons, where employees are encouraged to propose business ideas and implement them using AI. When outstanding ideas emerge, we actively support their development into real business solutions. Since the applications of AI vary by division—such as AI for BPO or AI for solutions—we also hold cross-departmental meetings to promote knowledge sharing and collaboration. These efforts form the foundation of our AI-driven development strategy.

To further promote learning, we have built a platform where employees can present and share their insights. By seeing the work of their peers, IT engineers may be inspired to pursue similar projects. When the IT team engages in continuous reskilling and personal growth, they can pass on their knowledge to other staff members, creating a powerful cycle of growth within the company.

Your BPO business is one of the most promising in Japan, growing at a rate of 4.2% annually due to labor shortages. The BPO services you provide help companies reduce costs while improving labor and operational efficiency. In your mid-term strategy plan, you identified scaling your BPO services as a key focus. What is your strategy for expanding this segment of your business?

We do not regard our BPO services as a standalone section of our business, but rather as an integral part of the BBS cycle. Therefore, when it comes to expanding our BPO services, we aim to grow them as part of a holistic, full-service approach through the entire BBS cycle.

Starting from consulting services, followed by system integration (SI) and system implementation, the cycle naturally leads to BPO services. Our goal is not to focus solely on BPO, but to strengthen the entire cycle as a whole.

As AI technology becomes more widespread and labor shortages become more severe, we expect BPO services to expand across society as a whole. Our BPO services are not simply about handling large volumes of routine tasks. What sets us apart is our collaborative approach—we work with clients to streamline their processes, consider systems that align with their needs, and provide expert consulting and solutions alongside our BPO offerings. We refer to this approach as "High-Value BPO."

Looking ahead, we anticipate growing demand for more complex and advanced BPO services, especially in specialized areas such as financial closing and taxation. By expanding our offerings in these high-expertise domains and delivering solutions that go beyond traditional outsourcing, we aim to provide our clients with genuine strategic value.

I find it fascinating that your operations are structured around the BBS Cycle. Today, companies are increasingly seeking end-to-end solutions that encompass everything from target operating models and process efficiency to IT integration and, in some cases, BPO. How do you ensure that the BBS Cycle remains fully consistent and that the end-to-end solutions you provide are seamlessly integrated for your clients?

This is where AI plays a crucial role. Our company has a strong foundation in accounting systems, and we are currently exploring the use of AI for journal entry generation. However, for AI implementation in this area, accuracy is essential. At its current stage, AI still requires repetition and fine-tuning, which can be costly.

Our goal is to leverage AI and other forms of automation wherever possible to enhance efficiency. However, in areas where human expertise is still necessary, skilled professionals are required to verify the accuracy and effectiveness of the output. By balancing AI-driven automation with human oversight, we can maintain consistency throughout the BBS Cycle and deliver fully integrated end-to-end solutions for our clients.

You mentioned that your company is expanding its AI capabilities and offering more AI-driven services to clients. At the same time, major technology providers such as Oracle, SAP, and BlackRock are also offering comprehensive end-to-end solutions, making the market increasingly competitive. How do you navigate the balance between competing with these global tech providers while also maintaining strategic partnerships with them?

Companies like Oracle, SAP, and BlackRock primarily serve global enterprises, whereas our clients vary widely in both size and needs. We partner with system vendors and share technology to deliver better services to the market.

What sets us apart in the Japanese market is that we go beyond simply implementing systems. As an integrated back-office supporter, we work closely with our clients to understand their needs and determine the ideal operating model together. Even after system implementation, we continue to provide full support to ensure successful adoption and ongoing optimization. This hands-on, end-to-end approach differentiates us from larger global tech providers. Furthermore, as mentioned earlier, we also offer consulting services and BPO, which further enhance our ability to deliver comprehensive solutions tailored to each client’s unique requirements.

We know that you have expanded your overseas presence with subsidiaries in Thailand and Vietnam. Are you planning to prioritize further international expansion in the coming years? If so, which markets are you targeting and why?

Our overseas subsidiaries primarily support Japanese companies that have expanded into local markets. Many of these companies operate in the engineering sector, and in some cases, their presidents also come from engineering backgrounds. As a result, there is often a shortage of personnel with strong accounting expertise, and we provide support in that area as well. We are particularly well-regarded for our support of companies in the manufacturing industry.

In Thailand, we support Japanese companies through system integration (SI), staffing services, and BPO. While we have not yet decided on our next expansion markets, Thailand functions as a regional hub, and we are also operating in Hong Kong.

Meanwhile, our Vietnam branch functions as a pilot for our future business model. It operates as a satellite for our BPO center, handling simple but important tasks. For example, the team in Vietnam analyzes outbound call logs (OCL) to verify data accuracy. While we continue to refine these initiatives, we are also carefully evaluating our next steps for further international expansion.

In your mid-term strategy plan, you highlighted M&A as a key driver for increasing gross revenue. Your goal is to reach JPY 100 billion in revenue by 2030, with M&As contributing around 20% of this growth. What is your primary M&A strategy? Are you looking to acquire companies both in Japan and overseas?

We are actively pursuing M&As as a means to enhance our services, expand into new markets, and secure new talent. Our strategy is to acquire companies that complement our strengths and compensate for areas where we seek improvement, allowing us to accelerate growth and refine our core competencies. Creating synergy is the key to any acquisition, whether the company is Japanese or foreign, and we are actively exploring opportunities in this space.

Expanding into new overseas markets requires a deep understanding of local laws, regulations, and tax systems. To ensure a smooth market entry, we consider partnerships with local accounting firms and leverage their expertise.

We know that your company has completed projects across various industries in Japan. If you had to highlight one specific project that best represents the BBS Cycle and the end-to-end services you provide, which project would you choose?

This project involves one of our clients—a major Japanese automobile manufacturer. We initially provided consulting services, followed by system implementation, and we are now offering ongoing operational support through BPO services. This project serves as a prime example of our end-to-end service model, demonstrating the "BBS Cycle," which integrates consulting, system implementation, and continuous BPO support into a comprehensive solution.

Your company is celebrating its 58th anniversary this year. If we were to return in two years for your 60th anniversary and have this interview again, what would you like to share with us? What are your dreams and goals for the company, and what achievements would you like to have accomplished by then as the president?

By 2030, our company aims to achieve JPY 100 billion in revenue and JPY 10 billion in profit. Our current mid-term plan will conclude in two years, and by then, we hope to have reached a key milestone on our path to hitting that JPY 100 billion revenue target. We have numerous other goals to achieve, and for more detailed information, I encourage you to refer to our website.

Personally, my vision is to establish a strong and sustainable foundation for the company. As a comprehensive back-office support partner, we aim to support our clients through the BBS Cycle so they no longer need to worry about back-office operations. This enables them to focus on their core business and make faster, more informed decisions. This is the direction I envision for the company.

For more information, please visit their website at: https://www.bbs.co.jp/

To read more about Business Brain Ota Showa, check out this article about them.