R&D off-shoring to Benefit India and China

Last updated on: June 28, 2006 at 1:48 am by Desh Kapoor

R&D off-shoring to Benefit India and China 2006-06-28T01:48:00-05:00 Desh Kapoor

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Guys.. its not about sweatshops for coding anymore. In case you didnt realize .. the high end stuff is going away too. I find it funny that the “patriots” in the US are trying to stop the Mexicans coming in!! The major scientific edge will go away.. as the ‘apprenticeship layer” – the lower end research jobs that train folks to grow higher will be gone.. as well as the high end stuff!!

Contrary to popular belief, it is intellectual capital and university collaboration, not just lower costs, that primarily attract companies to locate R&D activities in locations away from their home country, according to a new study sponsored by the Ewing Marion Kauffman Foundation. The study of more than 200 multinational companies across 15 industries, mostly headquartered in the United States and Western Europe, finds that emerging countries such as China and India will continue to be major beneficiaries of R&D expansion over the next three years as companies seek new market opportunities, access to top scientists and engineers, and collaborative research relationships with leading universities.

The study was released at a meeting of the Government-University-Industry Research Roundtable (GUIRR) of the National Academies. It was conducted by Marie Thursby, Ph.D., Professor of Strategic Management, Georgia Tech College of Management, and Jerry Thursby, Chair of the Department of Economics, Emory University, with sponsorship by the Kauffman Foundation.

Designed to identify and rank the importance of different factors feeding into the corporate decision-making process as to where to locate R&D facilities, the study also tracked R&D work coming into the United States from abroad, as well as R&D work going in the reverse direction; addressed favored countries for locating R&D work and why; and outlined trends industry expects for R&D expansion in the future.

Among the top factors going into new R&D siting decisions in both developed and emerging countries are market growth potential, quality of R&D talent, collaboration with universities and IP protection. How these factors influence the decision, however, depend on whether the site is in a developed or emerging country. In neither emerging nor developed countries was cost consideration the most important factor, which runs contrary to what has been reported by the media (according to an analysis of media coverage over the past few years in The Wall Street Journal and New York Times on multinational R&D locations).

Among the study’s more surprising findings, according to the researchers, was the role university collaboration plays in the decision-making process for locating R&D facilities. In fact, collaboration with universities was particularly prevalent as a factor for expanding to emerging countries, even though these countries provide lesser degrees of IP protection.

technorati tags:offshoring, outsourcing, R&D, India

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