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Technology

Rakuten to double IT engineer head count in India

E-commerce group to add 1,000 workers in Bangalore in global race for tech talent

The algorithms that drive Rakuten's business in Japan are increasingly being written by engineers in India. (Source photos by Rakuten and Masayuki Terazawa)

TOKYO -- Rakuten plans to double its workforce in India within two years, as the Japanese e-commerce group joins a wave of global tech giants in the race for engineering talent.

Rakuten's online shopping platform is not available in India, but the algorithms that power the $37 billion business in Japan are increasingly being written by engineers in the South Asian country. They are also responsible for developing software for Rakuten's online brokerage arm, as well as running a 24-hour security operation.

"It was getting difficult to recruit talent that meets our expectations in Japan, which prompted us to turn to India," Yasufumi Hirai, Rakuten's chief information officer and chief information security officer, told Nikkei Asia.

Rakuten India Enterprise, the Bangalore-based local unit, was established in 2014 and recently hired its 1,000th employee, making it already the largest among Rakuten's nine technology hubs outside Japan. Employees are currently working from home due to the COVID-19 outbreak, but the company plans to move to a larger office in Bangalore's central business next year to double head count to 2,000.

"What will happen once we reach 2,000 people? Since the competition for recruiting talent is tough, I think it would be difficult to expand to 3,000 in Bangalore alone," Hirai said. "We should think about setting up operations in a second city."

Rakuten's Yasufumi Hirai said in an interview with Nikkei Asia that it is becoming hard to find talent in Japan. (Photo by Manami Yamada)

If the head count tops 3,000, it would approximate the current number of Rakuten engineers in Japan.

In the face of intense competition from Amazon, Rakuten is boosting artificial intelligence capabilities that will help personalize the shopping experience across an ecosystem of 70 services. Rakuten also works with startups Altiostar and Innoeye Technologies, both of which have core software development operations in India, establishing what it calls a "cloud-native" mobile network business that can become an alternative to dominant telecom vendors like Huawei.

Rakuten's move is part of a broader wave of Japanese companies looking abroad for engineers. In July, Sony set up an AI research lab in Bangalore and Mumbai. Japan's IT workforce of 1.06 million is hardly growing, and companies will face a shortage of about 450,000 people in 2030, according to a government report last year. Meanwhile, about one million Indian students graduate from IT-related departments every year.

But Japanese companies are playing catch-up to a wave of global tech giants that already have a large footprint in India. Earlier this year, Microsoft said it is setting up its third development center in India and hiring "thousands of engineers." Google, which hired its first employees in India in 2004, now has offices in four cities and recently pledged to invest $10 billion in the country over the next five to seven years. Apple, which set up a research center in Hyderabad in 2016, is reportedly building another hub in Bangalore.

Aside from U.S. tech giants, Samsung and Huawei also hire thousands of employees in the country for research and development. The rise of homegrown tech companies like Flipkart and Paytm is adding to the battle for talent.

Rakuten has leveraged its sponsorship deal with Spanish soccer club Barcelona to gain brand recognition in India, despite not having a commercial business in the country. It is also keeping employees from moving to competitors by offering opportunities to work on a wide range of services.

"We want to secure resources in areas like data science and AI, as well as 5G and IoT in the mobile segment," Hirai said. He added that there are currently no plans for Rakuten to launch its e-commerce business in India.

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