North Sand Inc.'s Perspective on the Evolution of AI

North Sand Inc. (Headquarters: Chuo-ku, Tokyo; Representative Director President: Tomohiro Maeda), a comprehensive consulting firm, has compiled its views regarding questions from shareholders and investors concerning the structural changes in the IT and consulting industries due to the rapid progress of AI.

Regarding AI's impact on consulting work: North Sand believes that AI development will not eliminate the need for consulting. Consulting is characterized by client trust, organizational tacit knowledge, critical decision-making, and non-routine tasks, which are highly dependent on human expertise and difficult for AI alone to replace. The company also notes that Japan's employment customs (membership-based employment) and high-context communication culture result in significant inter-departmental coordination costs, making rapid internal development (insourcing) difficult compared to Western countries. Therefore, demand for consulting services, acting as a 'bridge' or 'lubricant' within organizations, is expected to continue.

Regarding the risk of continuously hiring inexperienced and junior staff in the AI era: North Sand has no intention of reducing the recruitment of inexperienced or junior staff. Inexperienced individuals are said to possess traits such as seeking feedback, accepting criticism, and acting quickly. They also tend to have fewer cognitive biases, are not constrained by existing frameworks, and are less prone to hasty judgments, often bringing bold proposals and fresh ideas. North Sand considers these qualities crucial for building client trust and will actively recruit such talent. The company also believes that reducing junior hires would increase risks such as 'hollowing out' (lack of future leaders), 'external dependence' (reliance on external recruitment), and 'rigidification' (fear of risk-taking due to uniformity). Junior staff are seen as playing a role in preventing these risks, sustaining organizational culture, and enhancing corporate competitive advantage.

Conclusion: North Sand concludes that AI development will not negatively affect its business; instead, it will positively impact performance and business through AI-related project acquisition and operational efficiency.

Disclosure: These views were also disclosed on the company's IR page on the same day.

References: The article cites 'Managers as Punishment: Fixing a Bug-Ridden Workplace' (2024) by Yuji Kobayashi and 'Horizontal vs. Vertical Information Structure of the Firm' (1988) by Masahiko Aoki to support its points on Japanese organizational structure.