Rising delivery center costs
First written in FY2022. 4 of 7 entries say "Materialised", first in FY2023-Q1. Latest entry: FY2026-H1.
No other company in this theme has enough history to compare yet.
- FY2026-H1MitigatedAnnual report
「By effectively utilizing the delivery centers in Colombia and Bangladesh, we secured a high operating margin and established a structure in which overseas sites make a significant contribution to profit.」
The effective use of delivery centers in Colombia and Bangladesh secured a high operating margin, demonstrating an operational response to delivery-center cost burdens and a contribution to profit. - FY2024-H1MaterialisedAnnual report
「Although we expected high growth, utilization declined because the start of large-scale projects was significantly delayed, among other factors. To achieve an early return to profitability, we fundamentally reviewed the cost structures of EMEA and AMER, which were currently loss-making, and implemented headcount reductions centered on unutilized personnel, office downsizing and reviews of IT costs.」
Unutilized personnel hired in anticipation of high growth and continued losses made cost-structure reforms necessary in EMEA and AMER, including headcount reductions and site closures. - FY2024-Q1MaterialisedAnnual report
「Operating profit was an operating loss of ¥891,590 thousand due to lower revenue and higher overseas-site costs resulting from the weaker yen.」
Higher overseas-site costs resulting from the weaker yen were identified as a factor in the quarterly operating loss, realizing the impact of delivery-center and overseas-site cost increases. - FY2023RestatedAnnual report
「Wage and other costs are currently rising because of inflation in these countries, and we expect the increase to continue for an extended period.」
The increase in wages and other costs caused by inflation in delivery-center countries and the policy of responding by raising customer prices were reiterated. - FY2023-Q2MaterialisedAnnual report
「Costs have also increased since the beginning of the period because of annual salary increases, but our operating model raises personnel unit prices by more than the rate of salary increases when new contracts are signed or contracts are renewed, and profitability is expected to improve in the second half.」
Cost increases from annual salary raises continued. The Company plans to increase personnel unit prices by more than salary growth when contracts are renewed and expects second-half profitability to improve. - FY2023-Q1MaterialisedAnnual report
「Costs have also increased since the beginning of the period because of annual salary increases, but our operating model raises personnel unit prices by more than the rate of salary increases when new contracts are signed or contracts are renewed, and profitability is expected to improve in the second half.」
Annual salary increases at the beginning of the period raised costs in EMEA and AMER, pressuring profit. Shifting from outsourcing to employees also generated temporary costs. - FY2022First statedAnnual report
「Wage and other costs are currently rising because of inflation in these countries, and we expect the increase to continue for an extended period.」
The risk that inflation-driven increases in wages and other costs in delivery-center countries will persist. The policy is to respond by raising prices charged to customers.