Japan IT Services: Takeaways from results follow-up with NorthSand - Al implementation still in early stages

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Japan IT Services: Takeaways from results follow-up with NorthSand - Al implementation still in early stages

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25 Jun 2026 22:46:49 ET │ 11 pages

Japan IT Services

Takeaways from results follow-up with NorthSand - AI implementation

still in early stages

Moriya Koketsu AC

CITI'S TAKE +81-3-6776-8304

We summarize the implications from our follow-up with NorthSand moriya.koketsu@citi.com

following its Q1 results. Consultant demand remains robust, with AI-related

projects increasing significantly. Unit price growth (+7% YoY) exceeded

guidance (+3%-5%), indicating growth in customer IT investment (including

AI). However, customer AI implementation still consists mainly of initial AI

adoption; comprehensive AI investment taking full account of RoI has not

yet kicked in. Currently, chatbot implementations dominate, and full-scale

AI agent implementation across Japanese companies will likely come later.

Against this backdrop, the company expects Q2 performance to be as

strong as Q1.

AI substitution — Currently, NorthSand has seen no impact from AI substituting

consultant work. Companies have not yet advanced their AI implementation enough

to replace consultants. Meanwhile, the company believes AI may eventually

substitute some consultant work such as research and analysis. However, AI

substitution will likely progress slowly for tasks requiring execution support,

concept development, and strategy formulation that need to incorporate non-

documented information such as interdepartmental coordination, budget

constraints, and field feedback.

AI exists only on screens and struggles with analysis beyond given contexts.

Therefore, we believe the company's view has a certain validity. However, while the