Cognition AI targets Japan as demand grows for AI coding agents

Cognition AI is making Japan its first major step in Asia, betting that its AI coding agent Devin can help companies and governments update old software with fewer engineers. The push matters because Japan faces a shrinking labor pool and large stores of legacy code that still support public agencies and critical infrastructure, according to Fortune.

Russell Kaplan, Cognition AI’s president, told Fortune in early June that Japan ranked as either the company’s first or second most active country by overall user engagement. Cognition said it opened a Tokyo office in April and plans to make Singapore its Asia-Pacific headquarters later this year.

Japan’s demographic pressure is central to the pitch. The OECD projects Japan’s working-age population will fall by more than 30% by 2060, and Japan’s Ministry of Economy, Trade and Industry estimated in 2023 that the country could be short 789,000 software engineers by 2030.

Kaplan told Fortune the demand is especially clear in government and critical infrastructure, where older systems need maintenance as the developer workforce tightens. In one example, Kaplan told Nikkei Asia that Sapporo’s city government used Devin to modernize more than 1 million lines of legacy code in about a quarter of the time he estimated the work would normally take.

Why Japan is drawing U.S. AI companies

Japan has also become an early overseas market for several U.S. AI companies. Fortune reported that OpenAI and Anthropic both chose Tokyo for their first international offices, while Microsoft, Alphabet and other large cloud providers have committed billions of dollars to Japanese data centers.

Fortune reported that Japan was the second country to receive access to Anthropic’s Mythos model through Project Glasswing, with MUFG, Mizuho and Sumitomo Mitsui among the banks included. That access ended after the U.S. barred foreign users from the model in mid-June, according to Fortune.

Kaplan told Fortune that Japan has put unusual effort into working with American AI companies to shape products for domestic needs. He also said AI’s ability to work across languages could help Japanese engineers cooperate with overseas teams while using Devin in Japanese.

Before Cognition formally entered Japan, Devin had already built a following there. Kaplan told Fortune that users debated which Japanese honorific fit the product and settled on “Devin-kun.”

Cognition expands beyond Japan

Cognition, founded in 2023, markets Devin as an AI software engineering teammate that can code, debug and deploy inside tools already used by development teams, according to Fortune. The company was an early example of workplace AI agents that employees can assign tasks through systems such as Slack.

Bloomberg reported in late May that Cognition raised more than $1 billion in a funding round that valued the company at $26 billion. Fortune reported that its annualized run rate reached $492 million at the time, up from $37 million a year earlier.

The rise of AI coding tools has put pressure on investor views of IT services companies, particularly in India, Fortune reported. Shares of Infosys, Wipro, Tata Consultancy Services and HCLTech have each fallen between 30% and 40% over the past 12 months, according to Fortune.

Kaplan told Fortune he expects Indian engineers and companies to adjust by using AI agents to take on broader work. He also pointed to Malaysia as an unexpected growth market, saying Kuala Lumpur has become a regional software engineering hub and that Cognition has started an Applied AI Engineering program there.

Cognition is also studying South Korea and Australia as possible expansion markets, Kaplan told Fortune. He said demand for the company’s compute is doubling about every seven weeks, and that teams in Asia can use processing capacity during hours when New York and Silicon Valley are mostly offline.

This story draws on original reporting from Fortune.