Silicon Valley talent war has Toyota seeking techies at home
When it comes to recruiting tech talent, Toyota is anything but subtle.
The Japanese automaker recently launched a marketing campaign targeting information technology specialists and software engineers along Tokyo’s suburban Nambu railway line, where the research centres of Japan’s signature tech giants are clustered.
“We want engineers from Nambu Line area more than from Silicon Valley,” declares one poster at Mukaigawara station, where one of the exits is designated exclusively for NEC Corp. employees.
Toyota’s talent raid is unusual in a country where lifetime employment is still the norm at many big companies.
“It’s very unique for a Japanese company as well-known as Toyota to blatantly target specific talent markets or companies with direct advertising in regional locations like this,” said Casey Abel, managing director at recruiter HCCR K.K. based in Tokyo.
“It says a lot when companies such as Toyota have to get this aggressive in order to attract the talents they need to navigate these markets.”
Such are the pressures bearing down on Toyota as it searches for global IT talent to power its expansion into autonomous driving and artificial intelligence.
“As cars become smarter, carmakers need strong software engineering capabilities to launch connectivity-based products,” said Zhou Lei, a Tokyo-based partner at Deloitte Tohmatsu Consulting.
“They’re traditionally strong in mechanical engineering, but when it comes to connectivity and software, electronics makers, communications and mobile companies are a good fit to transfer their capabilities to automakers.”
Salaries have soared in Silicon Valley for automotive technology experts thanks to the emergence of Uber and Tesla as serious rivals.
That’s why Toyota and Honda are looking for engineers at home, where average salaries for IT professionals are about 6 million yen ($54,500) a year, about half of what counterparts in the U.S. earn, according to a survey by the Ministry of Economy, Trade and Industry (METI) of Japan.
The technology belt along the Nambu line in Tokyo has yet to produce a world-class startup and some once-mighty names are in decline.
Toshiba, which has a research centre in the area, is forecasting a loss of 995.2 billion yen for its last fiscal year and is selling its semiconductor business to cover multibillion-dollar losses in its nuclear unit. Telecommunication and electronic device maker NEC reported the smallest annual operating profit in eight years.
“They may have to settle for Nambu Line all-stars until they are able to really compete with real IT giants for market-moving talent,” said Abel.
“I’m sure on a spot basis they can get people in Silicon Valley, but getting them is only half the battle as the competition is even more intense there,” he said.
“Retention and ability to provide people with a chance for meaningful and interesting work is amplified much more when you have Apple, Google, flying car startups, Amazon and others all around you.”
Japanese companies are playing catchup with U.S. rivals when it comes to making inroads into the fields of IT. Ford established a science lab in Palo Alto in 2012 to develop software, while GM has built two data centres in Michigan since 2013 to streamline product development, manufacturing, marketing, sales as well as connectivity services.
Toyota last year announced its connected-car strategy, which includes building a big data centre in Plano, Texas, to better understand how its customers drive the cars.
The company also spent $1 billion in 2015 to form a research institute in the U.S. focused on artificial intelligence and robotics technology and hired former U.S. defence scientist Gill Pratt to lead it.
Since then, the institute has established research centres
located quite close to four major U.S. universities: Stanford, MIT, Carnegie Mellon and the University of Michigan.
“This close co-location provides a natural mechanism for recruitment at universities and thinktanks where there’s a lot of talent,” said Bob Carter, executive vicepresident of sales for Toyota Motor North America.
On top of that, Toyota last month started a $100 million venture fund, Toyota AI Ventures, to invest in startups.
Many of the best minds want to have their own firms rather than be salaried employees so they can profit from their business when the technology takes off. The fund has already invested in a maker of cameras that monitor drivers and roads, a creator of autonomous car-mapping algorithms and a developer of robotic companions for the elderly.
“They didn’t have anyone who specializes in these fields, so they can’t internally groom those engineers,” said Koji Endo, an auto analyst at SBI Securities in Tokyo.
“Toyota had been able to manage on its own in the past, but … it will need to do it with someone else. Whether that is through collaboration, joint venture, or M&A remains to be seen.”