Public Service Outsourcing Market in Japan: Key Research Findings 2021

Driven by Sharp Increase in COVID-19-Related Operations, Public Service Outsourcing Market for FY2020 Expects 49.3% Rise from the Previous Fiscal Year to Attain 675,000 Million Yen

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the public service outsourcing market, and found out the market size and the market trends. 

Transition and Forecast of Public Service Outsourcing Market
Transition and Forecast of Public Service Outsourcing Market
Implementation Status of “One-Stop Counter” at Municipalities
Implementation Status of “One-Stop Counter” at Municipalities

Market Overview

Due to the influence of novel coronavirus, FY2020 witnessed rollout of various financial relief programs including new cash payment (to all residents in Japan) and provision of financial aids for precautionary measures to safeguard against infections (i.e. provision of financial aids to eating and drinking facilities that accept requests to cut opening hours), which sharply increased operations to handle inquiries and to receive applications. The situation resulted in greater utilization of outsourcing services at many municipalities. The market size of public service outsourcing, which refers to the outsourcing of counter services for citizens and outsourcing of general affairs (based on the sales at businesses), is expected to rise to 149.3% of the preceding fiscal year, reaching 675,000 million yen.
For FY2021, outsourcing expenses may be reduced because of the increased spending in the previous fiscal year to cope with COVID-19 while tax revenue declined. Still, as operations regarding cash payment and financial aids (to eating and drinking facilities that accept requests to cut opening hours) are likely to continue to some extent for FY2021. Therefore, although the public service outsourcing market for FY2021 is assumed to shrink to 93.9% of FY2020, it is expected to reach 634,000 million yen, which is 140.3% compared to FY2019.

Noteworthy Topics

Implementation Status of “One-Stop Counter” at Municipalities

According to the questionnaire to municipalities by telephone, conducted as a part of this research, the number of municipalities that have “adopted” the “one-stop counter” which provides citizens an access to public services by a single point accounts for 28.6% of the entire respondents. Viewing by population and region, it revealed that adoption rate tends to be higher in the area with larger population, and by region, adoption rates were relatively higher in “Chugoku/Shikoku”, “Kita-Kanto/Koshinetsu”, and “Hokkaido/Tohoku”.

Future Outlook

Municipalities are facing challenges to cope with diversifying and complicating demands for public services, such as “expansion of welfare service to adapt to aging population”, “expansion of childcare services for zero-waiting list”, and “provision of services for increasing non-Japanese residents”. Despite of the needs, because the number of officials is decreasing and overtime hours are reduced due to the influence of work-style reform, the workload has gone beyond capacity of what can be handled with limited in-house resource. Therefore, the municipalities have no choice but to rely on external resources. Moreover, because of the influence of “(promotion of) the rule authorizing conversion of fixed-term worker to indefinite-term employment” and “(an integrated rules for) appointment of public service officials with year-long employment contract”, the number of municipalities that have begun to consider introduction of outsourcing as a cost-cutting measure is increasing. 
In addition, outsourcing services is gaining support from the government, which actively promotes outside resourcing of public services at municipalities to private service providers. For these reasons, the public service outsourcing market is expected to be on the rise, and further growth is anticipated from FY2022. A compound annual growth rate (CAGR) of 12.3% is estimated between FY2019 to FY2023, and the public service outsourcing market for FY2023 (based on the sales at businesses) is projected to reach 720,000 million yen. 

Research Outline

1.Research Period: November 2020 to March 2021
2.Research Object: Service providers of public service outsourcing
3.Research Methogology: Face-to-face interviews by our expert researchers, literature research, and questionnaire by telephone

What is the Public Service Outsourcing Market?

Public service outsourcing refers to the outsourcing service for back-office work of municipalities. The market size is calculated as a total of “outsourcing of counter services for citizens”, the outside resourcing for operations of municipal office’s service counter for residents, and “outsourcing of general affairs”, which refers to the contracted work to carry out general affairs for municipal officers, such as payroll accounting. 

<Products and Services in the Market>

Outsourcing service for counter services for citizens, outsourcing service for general affairs

Published Report

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