The market size in 2024 is expected to be USD 8.4 billion , with a CAGR of 10.5 % from 2025 to 2035.
This research report is a market research report titled Future Trends and Business Opportunity Analysis of Japan’s Software-as-a-Service (SaaS) Market . This research report is a market research report on future trends and opportunity analysis of Japan’s Software-as-a-Service (SaaS) market. In this research report, KD Market Insights researchers used primary and secondary research analysis methods to evaluate market competition, benchmark competitors, and understand go-to-market (GTM) strategies.
Japan’s Software-as-a-Service (SaaS) market is expected to exceed USD 20.1 billion by the end of 2035. The market size in 2024 is expected to be USD 8.4 billion , with a CAGR of 10.5 % from 2025 to 2035.
According to experts at KD Market Insights, one of the key factors expected to drive the growth of the Japan Software-as-a-Service (SaaS) market is the growing digital transformation efforts in Japan. The Japanese government is actively working to implement digital transformation initiatives to modernize operations, improve efficiency, and strengthen competitiveness. According to our researchers, Japan ranks 4th in the Cloud Readiness Index (CRI) and is the top country for cloud investments by SMEs. Microsoft, Alphabet, and IBM play key roles in the Japanese SaaS market.
According to analysts at KD Market Insights, the main growth drivers for Japan’s Software-as-a-Service (SaaS) market are:
Increasing Demand for Cloud Services The adoption of cloud computing services is on the rise in Japan. Business organizations in Japan want to reduce the costs of their IT infrastructure without compromising performance. Adopting cloud computing services like SaaS allows Japanese businesses to increase flexibility and enable remote work. These technologies also improve accessibility and scalability as well as cost, making them favorable IT solutions for businesses in the country.
Accelerating Shift to Society 5.0: Japan is moving towards Society 5.0, a more beneficial concept than Industry 5.0. The shift to Society 5.0 has driven businesses in the country to seek solutions that help them streamline workflows, maintain productivity, and collaborate effectively. As SaaS offers industry-specific solutions aligned with the unique needs and regulatory requirements of various verticals, these advanced tools are being rapidly adopted to address businesses’ unique pain points, compliance requirements, and workflow challenges. These factors are expected to drive the market growth over the forecast period.
Government-led programs such as Society 5.0 and the establishment of digital agencies are accelerating digitalization in sectors such as healthcare, finance, and manufacturing. The shift to remote and hybrid work models is further driving demand for collaboration and productivity tools. Despite being a global technology leader, Japan’s SaaS adoption rate among SMEs is relatively low at 34%, indicating significant growth potential.
The market is characterized by a mix of international giants such as Salesforce, Microsoft, and Oracle, along with domestic players such as Fujitsu, NEC, Cybozu, and Sansan. Oracle, for example, has announced plans to invest more than $8 billion in Japan over the next 10 years to meet growing demand for cloud computing and AI infrastructure. Read
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Vertical SaaS solutions tailored to specific industries, such as agriculture, logistics, and retail, are gaining popularity, addressing unique challenges such as labor shortages and modernizing legacy systems. However, challenges remain, including a culture that favors on-premise solutions and strict data privacy regulations under the Act on the Protection of Personal Information (APPI).
To succeed in Japan’s SaaS market, providers must prioritize localization, user-friendly interfaces, and solid customer support. A focus on trust, quality, and compliance is paramount in this maturing yet evolving market.
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