10-minute MBA: the Dispatch ALT business model

This is just more on the Interac reorganization topic.

No one’s told me that I am missing anything in this, so I’ll just repeat for the third time: there is no reason for a ALT dispatching company to go under, as long as the government is there as a client. The business model is very simple:

1) Find young persons from English-speaking countries;

2) Stick them in front of Japanese elementary, junior and senior high school students throughout Japan;

3) Get paid by the school boards (i.e. government) and pay the young English speaker less than what you got from the school board.

This is just so very easy, it’s a surprise that even more individuals don’t try to set up such a business. The supply of “teachers” is virtually unlimited, since young people are ferried into Narita every week. Plus there are the ones who have already been employed as JET or ALT who are still around Japan for various reasons.

As can be easily learned on the internet, the Japanese government looks the other way when it comes to things like social insurance–even in situations where the government is treaty bound with other countries. But since your competition is going to cut these out indirectly by making the payment an individual’s responsibility. Since the other employees in the industry will buy gap insurance or otherwise will just not pay, you can set the base wage as low as what the competition does. The Japanese will like this because it doesn’t look like it is about dodging treaty commitments. Rather, it looks like it is (foreign) individual moral failing.

The problem with making this type of business a “go” is ko-ne. You have to have the connections to the various school boards.

Interac has these connections. You, as start-up, do not. So there is no reason, if you have the connections into the various school boards, why the business wouldn’t work.

Education is normally a thing that the government, or at least some deep-pocket nonprofit institution, provides. If you can convince a government to let you take a slice of pie, or a scoop of the honey, out in exchange for providing it some kind of service, well then, you have something, don’t you?

Putting young, warm bodies who happen to speak English in front of Japanese primary and secondary school students is a great service. If they can actually teach, that’s even better. That’s like a freebie—because it’s still going to be the same money, and nobody’s going to outbid you for them.

If anyone somehow becomes trouble, you just send them back home. This works even better with younger people. It’s less likely they will know their rights, much less have the fortitude to demand them.

So to me, this business model looks great as long as the ko-ne (connections) are there.

5 thoughts on “10-minute MBA: the Dispatch ALT business model

  1. You know, everyone can jump on me for saying this if they want, but in my experience (being fairly involved in the ALT community within my prefecture), dispatch companies serve another important function besides providing English speakers at a low cost. They provide the reassurance of the occasional, or more than occasional, bad apple that somehow manages to screw up the responsibility of 1. waking up on time every day, 2. not showing up to work drunk, and 3. not getting arrested or breaking the law. When ALT kids get reprimanded/sent home there is always a BIG to-do at Japanese schools. In other words, the kid is not simply sent home as quickly as possible to minimize the damage. Rather, stories of his “foreign-ness” are spread around the BOE community like wildfire for shock value. “Did you hear about the Canadian NET from xxHigh School? Arrested for marijuana!” “What about the Australian teacher from xxChu gakko?? Called in sick every day for a month!”

    Bringing 20 somethings fresh out of college with no work experience, handing them a few grand every month, and putting them within one or more of the party capitals of the universe is bound to have disastrous results, OFTEN. But as far as the locals are concerned there is nothing like the satisfaction one feels when yet another unfortunate gaijin is added to the “See?? Foreigners really are bad for society!!” urban myth bank. For this reason I think a lot of local governments prefer (at the very least unconsciously) to keep these dispatch companies around rather than hire EXPERIENCED competent professionals from the foreign pool, who in many cases, out-perform them in the workplace.

  2. It is very easy for dispatchers to go bankrupt. In certain areas competition between dispatch companies is intense. Smaller companies can and do go under when they lose a big contract or two.

    A company may lose a contract because someone else bids lower or they might not have it renewed after the Board of Education finds out the ALTs were not native speakers at all or gets tired of the company’s ALTs calling in sick, coming to work late etc etc.

    I believe Interac is big enough it will survive until the govt starts closing health insurance and labor law loopholes that make the business model affordable.

    1. I considered the small agencies. But their overhead must be, like, nothing. Maybe operating out of somebody’s apartment. So when the contracts don’t renew, they stop dispatching and go out of the business. But I am not certain that that would lead to bankruptcy. What are their outstanding liabilities?

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