Japan turns to digital solutions to tackle labor shortage
what
Japan continues to lag in digital transformation, with analogue processes still deeply embedded across both the public and private sectors. As a result, labour productivity remains comparatively low: output per hour worked is around 60% of that in many other advanced economies, a challenge that cuts across industries. To address this, the Japanese government has launched a comprehensive plan to advance a digital society, promoting broader digital adoption across the economy. Key priorities include the modernisation and digitalisation of industrial processes to improve productivity, support regional revitalisation, and strengthen long-term economic resilience.
Japan ranks 31st globally in digital competitiveness according to the IMD and places last among the 64 assessed economies in key areas such as availability of digital skills, effective use of data, and corporate agility for change. The country also has a very low number of startups per capita and a relatively small domestic software sector, increasing reliance on international solution providers.
At the same time, Japanese organisations face growing pressure to adopt new solutions that can raise labour productivity, particularly as labour shortages intensify and the working-age population continues to shrink. The use of digital systems across areas such as project planning and product development has expanded rapidly in recent years. This growing momentum is also visible in the sharp increase in the number and scale of software-related trade fairs and events, with large attendances at platforms such as SusHi Tech highlighting rising interest and demand for digital solutions.
How
Swedish software companies and other solution providers with strong digital or efficiency-enabling offerings face significant business opportunities in Japan. Demand is driven by structural factors such as an ageing population, a growing labour shortage, and a domestic lack of digital talent, combined with limited local competition in the software and digital solutions space.
In parallel, there is substantial potential for Swedish startups and scaleups to attract investment from Japanese companies seeking to accelerate their digital transformation through overseas partnerships and strategic investments.
The Business Sweden office in Tokyo has extensive experience supporting software-related market entry and expansion projects and is well positioned to assist Swedish digital companies that identify opportunities in the Japanese market.
Contact us
For more information contact Joakim Larsson at joakim.larsson@business-sweden.se