Market Overview

As the talent pool in Japan continues to shrink, a survey by the Statistics Bureau of Japan (a division of the Ministry of Internal Affairs and Communications) reveals that only 5% of individuals are willing to change jobs. As a result, competition for talent is intensifying, driving up hiring costs.
Due to this situation, new recruiting strategies, such as referral recruitment and alumni recruitment, are gaining popularity. Referral recruitment involves trusted individuals, both inside and outside the company, such as current employees and external business partners, recommending candidates they believe are a good fit. Alumni recruitment, on the other hand, focuses on hiring former employees who have previously worked with the company. As these strategies gain attention, the number of providers offering supporting tools and services is also increasing.

Since companies adopting referral recruitment and/or alumni recruitment strategies prioritize efficiency (i.e., aiming to hire high-quality candidates more quickly and cost-effectively) they prefer systemized tools and services that streamline the recruitment process. Driven by this trend, the referral recruitment and alumni recruitment services market was estimated to have reached 1,850 million yen (based on the sales of providers). It is projected to grow to 3,000 million yen in FY2023 (162.2% YoY) and 5,070 million yen in FY2024 (169.0% YoY).

Noteworthy Topics

Implementation of “Referral Recruitment” and “Alumni Recruitment” – Corporate Questionnaire Results

In this survey, we conducted a corporate questionnaire to HR divisions of private companies nationwide, between October and November 2024. 834 companies responded.
The result revealed that 50.1% of the companies have implemented "referral recruitment", while 38.8% implemented "alumni recruitment". Popularity of referral recruitment exceeded alumni recruitment by 11.8 percentage points.
When cross-tabulating the use of referral recruitment and alumni recruitment, the results split: While 33.6% have implemented both strategies, 44.6% have not adopted either approach.

In addition, there was a significant gap between the percentage of companies that have implemented "referral recruitment only" (16.5%) and that have taken "alumni recruitment only" (5.3%). The rejection to alumni recruitment stems from the Japanese sensitivity toward former employees, thinking "quitters are traitors." On the other hand, they feel more comfortable accepting referral recruitment, as "candidates are likely to be a good fit for the company, and a better retention rate can be expected due to a network already being built within the company."
Nevertheless, due to the growing competition for talent and rising hiring costs, we anticipate more companies will reassess the value of alumni recruitment with the sentiment like "it would be a missed opportunity to waste connections with former employees who are already familiar with the company's culture and possess the skills gained from their previous work experience with us."

Future Outlook

Currently, referral recruitment and alumni recruitment are primarily used by large telecom companies, manufacturers, trading companies, consulting firms, and service companies. However, given the shrinking workforce, the adoption of these methods is expected to increase in the future.

Furthermore, although these recruiting strategies are mainly focused on hiring full-time employees at the moment, we anticipate they will increasingly be applied to part-time hiring, where the candidate pool is much larger.
Given the growing adoption of referral recruitment and alumni recruitment by more companies, which are increasingly turning to systemized tools and services to streamline their hiring processes, the referral recruitment and alumni recruitment services market is expected to experience rapid growth. The market is forecasted to reach 30,000 million yen by FY2028, growing at CAGR of 58.5% between FY2023 and FY2028.

Research Outline