English Proficiency: A Growing Concern

Japan recently ranked 92nd out of 116 non-native English-speaking countries in the 2024 Global English Proficiency Index—its lowest position ever. The decline is particularly stark among people aged 18 to 25, who are falling behind older professionals. Unlike their seniors, who often gain English exposure at work, younger generations have struggled with motivation and opportunities to learn the language, especially during the pandemic.

For the IT sector, this is a significant issue. English is the universal language of technology and global collaboration. If this trend continues, it could hinder innovation, limit international partnerships, and hurt Japan’s competitiveness on the world stage. To address this, Japan will need to:

• Better integration of English into schools and universities.
• Corporate programs that encourage employees to learn English.
• Leverage foreign talent to create bridges between Japan and the global market.

The Talent Shortage and “2025 Cliff”

A major challenge looming over Japan’s IT sector is the so-called “2025 Cliff,” a term coined by Japan’s Ministry of Economy, Trade, and Industry (METI). It refers to the risks posed by outdated IT systems—known as legacy systems—that many businesses are still using. If these systems aren’t modernized soon, companies could face skyrocketing maintenance costs, struggle to adopt new technologies, and lose their edge in the global market.

METI estimates that sticking with these outdated systems could cost Japan up to ¥12 trillion annually. Additionally, the IT talent shortage is becoming increasingly acute. By 2025, Japan is projected to be short 360,000 software engineers—a gap that could widen to 450,000 by 2030.

To avoid falling off this “cliff,” businesses need to:

• Embrace DX and use modern software.
• Invest in recent technologies like cloud computing, AI, and big data.
• Train their current workforce to handle modern IT tools.
• Attract international talent and adopt collaborative models, such as team augmentation, to bridge technical and cultural gaps.

We provide more details about the 2025 Cliff phenomenon in the following article: The 2025 Cliff: A Major Challenge for Japan

Opportunities for Global Talent

Despite these challenges, Japan’s IT sector offers numerous opportunities, especially for international software engineers. Here’s why:

• High Demand: Software engineering remains one of the most in-demand professions in Japan due to the rapid pace of digital transformation across industries such as finance, healthcare, manufacturing, and e-commerce. The demand for skilled software developers extends to both front-end and back-end roles, as well as specialized fields like artificial intelligence, data science, and cloud infrastructure.
• Language Flexibility: The approach to language requirements in Japan's IT sector has been evolving. Traditionally, most companies required Japanese language proficiency for their roles. However, many corporations have recently started to realize that removing this barrier opens the door to a broader pool of global talent. This shift is driven by the acute shortage of IT professionals and the recognition that technical expertise often outweighs language skills in software development. As a result, an increasing number of companies are now willing to hire candidates who speak little or no Japanese, especially for roles that don’t involve direct customer interaction.
• Remote Work: The shift towards remote work, accelerated by the COVID-19 pandemic, has created new opportunities for IT professionals worldwide. Many Japanese companies now offer flexible work arrangements, allowing skilled software engineers to collaborate on projects without relocating to Japan.

The Road Ahead: Balancing Challenges and Growth

In 2025, Japan’s IT sector faces critical challenges, including declining English proficiency, outdated systems, and a growing talent shortage. These issues present obstacles to progress but also significant opportunities for innovation and growth.

To move forward, the sector must embrace advanced technologies such as AI, cloud computing, and data analytics, while building global collaboration and attracting international talent. Equally important is the investment in developing the next generation of skilled professionals through education and training initiatives.

By addressing these challenges strategically, Japan has the potential to strengthen its position as a global technology leader and secure a promising future for its IT industry.