Offshoring: R&D Positions Begin Moving Overseas

Outsourcing generally begins at the bottom of an organization, with the simple assembly work shipped off first, followed by manufacturing and then skilled labor, like computer programming. One of the last tasks to go is the research and development performed by professional scientists and the like.

A recent article in The New York Times cites a study, to be presented today to the National Academies, the nation’s foremost advisory groups on science and technology, that suggests more and more high-level R&D work will be shipped off to countries like China and India in the future.

The survey quizzed more than 200 multinational companies, representing 15 industries in the United States and western Europe, on their plans for future R&D, with 38 percent planning to “change substantially” the global distribution of their R&D efforts within the next three years, The Times reports.  China and India attracted the most interest in projects because of their rapidly-growing economies and top-notch education systems.

According to the Times, the study determined that the quality of scientists and engineers and their locations relative to research centers and laboratories are of the utmost importance to companies looking to outsource high-level work.

The study also found that low labor costs are not the major determining factor for companies, though they are certainly taken into consideration when shifting into an emerging market.  Rather, the majority of companies are looking for locations where they can forge lasting relationships with universities in order to gain access to professors and promising graduates, The Times reports.

“The story comes through loud and clear in the data,” Marie Thursby, an author of the study and a research associate at the National Bureau of Economic Research, told The Times.  “You have to have an environment that fosters the development of a high-quality work force and productive collaboration between corporations and universities if America wants to maintain a competitive advantage in research and development.”

The study was financed by the Ewing Marion Kauffman Foundation, which supports the study of innovation, The Times reports.

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