1. Introduction
1.1. Market Definition
1.2. Market Segmentation
2. Research Methodology
2.1. Variables (Dependent and Independent)
2.2. Multi Factor Based Sensitivity Model
3. Market Dynamics
3.1. Drivers
3.2. Challenges
3.3. Opportunities
3.4 Recent Developments
4. Japan SaaS Market Outlook
4.1. Market Size and Forecast, 2018-2027
4.1.1. By Value (USD Million)
4.2. Market Share and Forecast, 2018-2027
4.2.1. By Deployment Model
4.2.1.1. Japan SaaS Market, By Deployment Model (2018-2027F)
4.2.1.1.1. Private, 2018-2027F (USD Million)
4.2.1.1.2. Public, 2018-2027F (USD Million)
4.2.1.1.3. Hybrid, 2018-2027F (USD Million)
4.2.2. By End User
4.2.2.1. Japan SaaS Market, By End User (2018-2027F)
4.2.1.2.1. Manufacturing, 2018-2027F (USD Million)
4.2.1.2.2. BFSI, 2018-2027F (USD Million)
4.2.1.2.3. Retail, 2018-2027F (USD Million)
4.2.1.2.1. Healthcare, 2018-2027F (USD Million)
4.2.1.2.1. Others, 2018-2027F (USD Million)
5. Competitive Landscape
5.1. Company Profiles
5.1.1. Microsoft
5.1.1.1. Company Overview
5.1.1.2. Business Strategy
5.1.1.2.1. Growth Expansion Strategy
5.1.1.2.2. Distribution Channel Strategy
5.1.1.2.3. Product Strategy
5.1.1.3. Key Product Offerings
5.1.1.4. Financial Performance
5.1.1.5. Key Performance Indicators
5.1.1.6. Risk Analysis
5.1.1.7. Recent Development
5.1.1.8. Regional Presence
5.1.1.9. SWOT Analysis
5.1.2. Alphabet Inc.
5.1.3. IBM
5.1.4. Hewlett-Packard Company
5.1.5. Oracle
5.1.6. Salesforce.Com, Inc.
5.1.7. SoftBank Corp.
5.1.8. Fujitsu
Japan Software as a Service (SaaS) Market Size, Forecast, and Trend Highlights Over 2025-2037
Japan Software as a Service Market size was valued at USD 12 billion in 2024 and is projected to reach USD 46 billion by the end of 2037, rising at a CAGR of 11% during the forecast period, i.e., 2025-2037. By 2025, the industry size of japan software as a service is estimated at USD 13 billion.
The rapid digital transformation in several industries such as manufacturing, BFSI, retail and e-commerce, and healthcare is a key factor fueling the market growth. Businesses in Japan, especially SMEs and large enterprises, are accelerating digital transformation initiatives to improve efficiency, scalability, and customer engagement. As more than 95% of Japan’s companies are SMEs, the government has launched programs, including Digital Transformation (DX) Certification, to support the adoption of cloud solutions in SMEs.
Japan has seen a surge in investment from major cloud providers such as AWS, Microsoft Azure, and Google Cloud, which is enhancing local cloud infrastructure. Major cloud service providers are making significant investments in Japan's cloud infrastructure to meet the growing demand for SaaS applications. For instance, Amazon Web Services (AWS) plans to allocate nearly USD 15 billion into its Japan cloud platform by 2027, supporting the country's digital transformation initiatives. This growing infrastructure promotes the development and implementation of SaaS platforms with better performance, security, and compliance for all local users.
Japan Software as a Service Sector: Growth Drivers and Challenges
Growth Drivers
- Shift towards remote work and hybrid workforce models: The COVID-19 pandemic and its aftermath resulted in a sustained shift toward remote and hybrid work culture in Japan. According to METI, remote work culture adoption in Japan surged from 17.6% in 2019 to over 40% in 2021. Furthermore, Cybozu, a Japan-based SaaS company, recorded a 30% growth in users of its cloud-based team collaboration software during 2021–2022. This transition has thus increased the demand for SaaS tools that enable remote collaboration, communication, and project management. Due to the rising remote work trend, companies are adopting cloud-based platforms to ensure business continuity and employee productivity in distributed work environments.
- Government initiatives and regulatory support: The government is actively promoting digitalization through initiatives, including the Digital Agency, which promotes increasing the digital transformation in public services and infrastructure. Regulations in Japan, for instance, the Act on the Protection of Personal Information (APPI), shape SaaS design by making data localization and consent management mandatory. Thus, Microsoft Japan invested in local data centers to align with APPI, allowing public sector adoption of Microsoft 365 cloud solutions. Policies supporting cloud adoption and digital innovation are creating a favorable regulatory environment for SaaS growth, encouraging both public and private sectors to embrace cloud-based solutions.
Major Technological Innovations in the Japan Software as a Service Market
Japan's Software as a Service (SaaS) market is rapidly evolving, fueled by technological innovation and strategic investments. Key drivers include AI integration, 5G expansion, IoT adoption, stronger cybersecurity focus, and cloud-native architectures. Leading sectors such as manufacturing, telecom, and finance are at the forefront of adoption. These trends highlight the growing importance of SaaS across industries in Japan.
|
Trend |
Industries |
Example / Data |
|
AI Integration |
Manufacturing, Finance |
Hitachi invests $1.92B in AI for Lumada |
|
5G Expansion |
Telecommunications |
99% coverage as of March 2024 |
|
IoT Adoption |
Manufacturing |
Sony’s IoT revenue hit $2B in 2022 |
|
Cybersecurity Focus |
Finance, Government |
Oracle invests $8B in cloud & AI infrastructure |
|
Cloud-Native Shift |
Cross-industry |
52%+ of firms fully adopted cloud by 2023 |
Cybersecurity in Japan Software as a Service (SaaS) Market: Adoption and Impact
The Japan software as a service market faces rising cybersecurity challenges amid rapid digital growth and cloud adoption. In 2023, the network security market hit USD 5.0 billion, driven by remote work, yet a talent gap of over 200,000 cybersecurity professionals by 2025 adds risk. To counter threats like phishing and ransomware, up to 58% in 2022, firms are adopting AI-based threat detection and multi-factor authentication, which has cut phishing cases by up to 25%. Government support, including USD 1.5 million in cyber investments since 2022, and Japan’s role in regional cybersecurity efforts, are boosting trust in SaaS. These actions support the market’s projected growth to $3.1 billion by 2030.
|
Company |
Attack Type |
Impact |
Key Remedies |
|
NTT West |
Data Breach (2023) |
Long-term data leak, reputational damage |
Contractor oversight, encryption, and security audits |
|
NTT DOCOMO |
Data Breach (2023) |
5.96M users affected, regulatory scrutiny |
MFA, AI threat detection, and incident response plans |
|
Coincheck |
Crypto Heist (2024) |
$535M loss, trust erosion |
Intrusion prevention, staff training, and real-time monitoring |
Challenges
- Shortage of skilled IT and cybersecurity professionals: As SaaS adoption is increasing across industries, there's a rising demand for individuals capable of managing cloud infrastructure, ensuring data security, and supporting digital transformation efforts. However, Japan is predicted to face a labor shortage of over 200,000 cybersecurity professionals by 2025, creating a critical skills gap. This shortage of labor is likely to impact everything from SaaS implementation and maintenance to the ability to respond effectively to cyber threats. Without sufficient talent, organizations struggle to adopt advanced SaaS tools securely and efficiently, increasing the risk of data breaches, system downtime, and compliance failures.
Japan Software as a Service Market: Key Insights
| Report Attribute | Details |
|---|---|
|
Base Year |
2024 |
|
Forecast Year |
2025-2037 |
|
CAGR |
11% |
|
Base Year Market Size (2024) |
USD 12 billion |
|
Forecast Year Market Size (2037) |
USD 46 billion |
|
Regional Scope |
|
Japan Software as a Service Segmentation
Application (Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Human Resource Management (HRM), Operations Management)
The customer relationship management segment is anticipated to hold a dominant share of 35% during the forecast period, owing to rising demand for personalized customer engagement and data-driven decision-making. SMEs, backed by government initiatives such as those from METI, are rapidly adopting CRM tools to boost efficiency and competitiveness. The incorporation of AI and analytics further enhances customer insights, especially in the retail and finance sectors. In terms of adoption of CRM, METI reported a 20% rise among small medium medium-sized firms since 2020, driven by the flexible cloud-based platforms. Additionally, cloud scalability and subscription-based pricing in Japan make CRM solutions highly chosen for cost-conscious low budget firms.
End use (BFSI, Manufacturing, Retail, Healthcare, IT & Telecom)
The BFSI segment is predicted to hold 30% share by the end of 2037 due to its need for secure, cloud-based solutions for risk management and compliance, as mandated by Japan’s Financial Services Agency (FSA). Financial institutions are increasingly embracing SaaS to streamline operations, drive smart banking innovations and elevate customer experiences. Rising cybersecurity threats and stringent regulatory requirements are further accelerating the demand for secure, compliant cloud-based solutions. Additionally, the rising integration of AI and data analytics within SaaS platforms allows personalized financial services while working on risk management capabilities.
Organization Size (Small and Medium Enterprises (SMEs), Large Enterprises)
The large enterprises segment is expected to register rapid growth during the forecast period owing to owing to rising need for better compliance, scalability, and enhanced data security for managing huge data in large-scale companies and subsidies, and high reliance of large enterprises on customized on-premise systems. Moreover, the government of Japan established a digital agency in 2021 to accelerate the digital transformation. One of the notable advancements is the launch of DX Certification System which offers incentives to large-scale companies.
Our in-depth analysis of the global japan software as a service market includes the following segments:
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Application |
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End use |
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Deployment Model |
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Organization Size |
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Technology |
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Customize this ReportJapan Software as a Service Industry - Regional Synopsis
Tokyo is expected to account for around 56.2% during the forecast period. Its leading position is supported by its key role as the top economic and technology hub, with the presence of top firms such as NTT DATA and Fujitsu. In addition, strong adoption of SaaS in the BFSI and IT sectors and well-established 5G infrastructure backed by the National Institute of Information and Communications Technology contribute to Tokyo’s expansion.
Osaka is predicted to be the fastest-growing city in Japan software as a service market due to the digital shift in its manufacturing and automotive industries. Between 2022 and 2024, SaaS use in Osaka’s manufacturing sector grew by 15% each year, ahead of Tokyo’s 10% growth in finance and IT. Further, support from the Osaka Prefectural Government and JETRO, including green policies and SME incentives, is promoting demand for supply chain and IoT-related technology.
Companies Dominating the Japan Software as a Service Landscape
- Company Overview
- Business Strategy
- Key Product Offerings
- Financial Performance
- Key Performance Indicators
- Risk Analysis
- Recent Development
- Regional Presence
- SWOT Analysis
The Japan software as a service market is highly competitive, with global players like Salesforce and Microsoft competing alongside local firms like Fujitsu and NTT DATA. Key strategies include partnerships, such as Fujitsu’s 2022 tie-up with Salesforce, and major investments, such as NTT DATA’s USD 1.2 billion in cloud infrastructure. U.S. firms focus on AI and scalability, while Japanese companies prioritize local compliance and customization. European companies like SAP push ERP integration, and new entrants such as Zoho attract SMEs with affordable solutions, further intensifying market competition. Here is a list of key players operating in the market:
|
Company Name |
Country of Origin |
Estimated Market Share (2025) |
|
Salesforce, Inc. |
USA |
12.2% |
|
Microsoft Corporation |
USA |
10.1% |
|
SAP SE |
Germany |
8.4% |
|
Oracle Corporation |
USA |
7% |
|
IBM Japan Ltd. |
USA |
4% |
|
Google Cloud (Alphabet Inc.) |
USA |
XX% |
|
Atlassian Corporation |
Australia |
XX% |
|
Samsung SDS Co., Ltd. |
South Korea |
XX% |
|
Zoho Corporation |
India |
XX% |
|
ServiceNow, Inc. |
USA |
XX% |
|
Sage X3 (Sage Group) |
UK |
XX% |
|
MYOB Group Limited |
Malaysia |
XX% |
|
Fujitsu Limited |
Japan |
XX% |
|
NTT DATA Corporation |
Japan |
XX% |
|
NEC Corporation |
Japan |
XX% |
Given below are the areas covered for each company in the Japan software as a service Market:
Recent Developments
- In March 2024, Mitsubishi Electric Corporation announced a strategic partnership with Nozomi Networks, a developer of operational technology (OT) security solutions. This collaboration focuses on integrating Mitsubishi Electric's factory automation equipment with Nozomi's OT network-visualization and intrusion-detection technologies to enhance system security and availability.
- In March 2024, Mitsubishi Electric integrated digital twin technology into its SaaS tools for manufacturing, allowing real-time production simulations. Backed by METI’s Project PLATEAU, this improved factory efficiency. The innovation boosted production accuracy by 35% in automotive lines and led to a 15% rise in adoption across Osaka’s manufacturing sector. It also helped cut operational costs by 12%.
- In July 2023, NEC Corporation introduced its NEC Generative AI Service, offering proprietary large language models (LLMs), dedicated hardware, software, and consulting services tailored for enterprise clients. The service aims to support business transformations by providing customizable AI solutions. NEC has set a target of achieving approximately $346 million in sales over the next three years from its generative AI-related businesses.
Author Credits: Abhishek Verma
- Report ID: 2216
- Published Date: May 21, 2025
- Report Format: PDF, PPT
