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Companies outsource R&D
External talent pool not only about cost and quality...

By Dan Ilett

Published: Wednesday 09 August 2006

Companies are partnering with outsourcing providers in a bid to get their products to market faster and cut costs on innovation.

A study by OutsourcingCenter, a website that gives advice on competitive advantage, found CIOs and IT directors are increasingly relying on the global services market for their research and development.

The report said: "This shift in delivery location over the past few years has had a major impact on their approach to innovation."

But fewer than one-quarter of respondents said reduced R&D costs are a top driver for outsourcing. Instead companies realise lower costs from outsourcing are only short-term and they can see greater value in more skills to improve products and accelerate R&D.

In 2004, 67 per cent of respondents said lower cost was the largest benefit of offshore development and only eight per cent said shorter time to market objective was the largest benefit of outsourcing.

This year 16 per cent of respondents said 24/7 global R&D is one of the most important benefits of outsourcing. Almost one third said the ability to "exploit skilled labour" is the number one benefit of outsourced R&D.

Wipro Technologies commissioned the report.