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Technology

Japan to hire Amazon to build government cloud

Tokyo picks US tech giant over domestic players like NTT Data

Amazon.com unit Amazon Web Services is a global leader in cloud technology.   © Reuters

TOKYO -- The Japanese government will tap Amazon Web Services to help move human resource systems and document management tools onto the cloud in a more than 30 billion yen ($273 million) contract through fiscal 2026, Nikkei has learned.

The government aims to put systems currently operated by different ministries and agencies on the cloud in four to eight years. It is expected to officially choose industry leader Amazon Web Services this spring to build 20 core governmentwide systems to kick-start the process, due to its pricing and quality of services.

Cloud-based systems are expected to cost a third of the current set up to maintain. It would also free up manpower, helping to boost productivity.

Noncore systems, such as those specific to the pension system or to a specific ministry, will be launched as they become ready and meet government standards. The government wants cloud service providers to have data centers in Japan due to security concerns, which means it cannot work with Chinese companies required to manage data at home.

Amazon Web Services, Microsoft and Google currently lead the world's cloud industry. The Japanese government so far has relied on Japanese players like NTT Data for its technology needs, for which it budgets about 700 billion yen.

But Japanese companies have fallen behind American giants when it comes to cloud technology. More are expected to work with overseas players to provide supplementary services, like NTT Data, which helps companies make better use of Amazon Web Services.

The Japanese government is also behind the U.S. and Europe when it comes to using cloud technology, likely due to concerns over potential data leaks.

Using one cloud service provider could pose a major problem during outages, like a major disruption at Amazon Web Services' data center in Japan last year. Tokyo will need to devise strategies to prevent such issues.

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