Issues to be Addressed

The outlook for the global economy has grown more uncertain because of greater risk related to various issues. While the economies of both North America and Europe are firm, a series of developments are having a major impact on world affairs, and these include the possibility of an economic slowdown in developing countries, such as China; religious and ethnic conflicts; and nuclear proliferation, particularly on the Korean Peninsula. Meanwhile, in Japan, economic policies and demand from the upcoming Olympics, etc. have fueled domestic production, but only on a short-term basis. Over the medium to long term, there is an increasing possibility that the domestic market will shrink as Japanese manufacturers continue to shift their production overseas and the general population ages and declines.

Even in such an unpredictable operating environment, through the initiatives listed below, the Group aims to achieve sustained growth by reengineering its onshore businesses to respond to the shrinking domestic market while strengthening and developing its offshore operations in multiple regions.

(I) Constructing a System to Supplement Highly Variable Businesses

For manufacturing-related businesses, primarily those in Japan, a large number of workers can suddenly lose their job when a major recession, such as that caused by the collapse of Lehman Brothers, hits because of the nature of dispatching workers and outsourcing operations related to mass production, which entails sudden changes in production. However, some of these companies that let workers go are unable to reach the same level of earnings they previously had because their hiring cannot keep up with demand when production grows during the subsequent economic expansion. These lost opportunities are a major issue.

It is important, therefore, that the Group create a system in which the overall group can not only continue to be profitable even when there is a sudden, massive contraction in manufacturing activity and keep workers without letting them go but also generate the same level of earnings when manufacturing activity begins to pick up by immediately dispatching workers. To do that, the Group is expanding its businesses in fields that have different business cycles than that of the manufacturing industry and fields that are not easily impacted by business conditions, and, in the medium term, is aiming to generate no more than 10% of its revenue from manufacturing-related businesses in Japan.

(II) Creating a Business Management System that Does not Miss Growth Opportunities

Because of Japan’s declining population, the Japanese market is limited and it cannot be expected to experience strong future growth. On the other hand, the global population is expanding, and there is the view that it may grow by an additional 3.0 billion. For many of the Group’s businesses, earnings are tied to the number of people working. Therefore, the Group will build a system to facilitate the international flow of people from countries with growing, excessive populations to ones with insufficient populations, and will strive to capture that growth potential. It is the Group’s opinion that after creating and putting this system into operation, it will have created a path to become the world’s top human resources company. Thus, the Group is investing in growth to create this system.

(III) Accelerating Growth through M&As and Alliances

In addition to moving forward with efforts to expand its businesses in fields that have different business cycles than that of the manufacturing industry and fields that are not easily impacted by business conditions, the Group is actively promoting M&As to strengthen its operations in these fields and to develop alliances with other companies. Furthermore, in order to facilitate the international flow of human resources, the Group is actively undertaking M&As and developing alliances with other companies to capture needed business resources. The Group will provide sophisticated services that integrate the know-how it has acquired over the years and beat the global competition, which is expected to grow fiercer in the future.

(IV) Strengthening the Corporate Governance System

The Group is aggressively undertaking M&As and expanding its business globally, and even acquired companies must implement sound management suitable for a company whose parent company is a listed company. To continually achieve this, a priority objective will be to enhance the Group-wide corporate governance and compliance system, in addition to applying the internal control system to the Group as a whole, with common goals and methodology established from the viewpoint of global management.

(V) Strengthening Corporate Structure through Staff Development

Being engaged in a business that deals with human resources, the Group recognizes its staff as its foremost business asset. The Group undertakes thorough training and educational activities to increase not only the basic knowledge and skills for properly handling human resources and providing various services related to human resources but also labor and production management skills for production worksites. Furthermore, the Group is tackling the important issues of securing top-quality human resources and training them in order to quickly, flexibly, and precisely meet customer needs, which are growing more sophisticated and diverse.

In particular, a critical priority going forward will be the global recruiting and training of qualified individuals, regardless of their nationality or gender, who can successfully manage and develop the Group's new businesses and overseas businesses, have a broad range of expertise and experience, are acquainted with global protocols and have a globally acceptable law-abiding awareness.