TecTrends: R&D Writing is on the Wall

A growing number of research facilities plan to open research and development (R&D) facilities in China. They are doing so at the expense of facilities based in the United States. About 60 percent of research entities plan to outsource ten percent or more of their R&D offshore to locations in Asia. Sixty-five percent say they will increase their R&D operations in Asia over the next five years as well. Sixty-one percent of 400 R&D scientists surveyed say they will outsource operations to China, while 50 percent say they will send their R&D work to India. Canada, Russia, and Mexico are being used by only a few research facilities as offshore locations. The major reason for outsourcing R&D work is to support foreign manufacturing capabilities and to develop a global technology infrastructure. Research organizations say that lower cost was not the primary reason they decided to outsource these activities. Lower costs were cited as the second-ranked consideration for outsourcing R&D offshore, however. Over 50 percent of the research scientists who say they plan to outsource R&D by 2008 also say they expect a reduction in staffing at their facilities in the U.S. Industry analysts justify the removal of R&D from the U.S. to other countries as being one part of overall globalization and a desire to enhance the capability to support offshore manufacturing operations.

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