Japan-based staffing firm Outsourcing Inc. (2427: JP), the tenth-largest global staffing firm, reported revenue today for the full year ending 31 December 2021 of JPY 569.3 billion (USD 4.95 billion), an increase of 55.9% when compared to the previous year.

Last year Outsourcing had postponed the release date for its third-quarter results citing suspicion of inappropriate accounting and that it had begun an investigation. On 28 December 2021, the company announced that it had received the investigation report from the Investigation Committee. The full report can be found here. The Committee recognised that, from the fiscal year ended December 2013 at the latest, inappropriate accounting, including overstated recognition of sales through so-called “barter transactions” and deferral of expenses, was conducted at Outsourcing.

As a result of the investigation, the company submitted an amendment to its annual and quarterly securities report for the past fiscal years and amendments to its annual and quarterly financial results.

FY results

For the fourth quarter, the group reported revenue of JPY 157.3 billion (USD 1.37 billion), up 53.1% over the previous year.

Outsourcing Inc. provides outsourcing services in electronics, cars and other areas. It also provides temporary staffing services, known in Japan as worker dispatch.

During the year, the group said there were many negative factors regarding operating profit, such as shift schedule adjustments due to semiconductor shortages and supply chain disruptions, regulations on economic activities associated with the epidemic of Delta and Omicron Covid-19 variants, and the front-loading investment of recruiting expenses due to HR shortages. However, it was complemented by businesses with strong performance such as the ecommerce logistics dispatch, U.S. military facilities business, facilities-related business, etc., and operating profit was almost within the group’s initial forecast.

The group said HR demand in the global market is very strong, and business has expanded in all segments by ‘absorbing various negative factors’, including Covid-19, exceeding the Medium-Term Management Plan and the initial forecast to achieve record highs for 4Q (Oct-Dec.) as well as full-year.

Outsourcing added that the performance of Cpl Resources, which became part of the group in January 2021, greatly exceeded estimations at the time of its acquisition and contributed significantly to consolidated revenue.

Revenue by segment

During the year, the group made a number of acquisitions.

• On 28 January, Outsourcing announced it would acquire Select Staff Group and HorizonOne Recruitment
• On 29 January, it was announced Outsourcing, through its subsidiary Outsourcing Technology, would acquire Itec Co., a company engaged in electrical telecommunications construction work and pillar construction work
• On April 2021, the company announced that, through its subsidiary American Engineering Corporation, it will acquire California Pacific Technical Services LLC
• On July 2021, Outsourcing announced that its American Engineering Corp. subsidiary acquired Integrity Networks Inc., a firm based in the US
• On September 2021, the group announced that it had acquired all of the shares of ISC Inc., a Japan-based HR services firm.
• On October 2021, the group acquired all of the issued shares of two companies, ARK Security System Corporation and ARK Miraizu Corporation, making them subsidiaries.

Looking ahead the group forecasted revenue of JPY 695.00 billion (USD 6.05 billion) for the full year ended 31 December 2022.

Shares in Outsourcing closed on Friday at JPY 1,355 (USD 11.80), up 0.89% on the day. The company has a market cap of JPY 164.96 billion (USD 1.43 billion).