Outsourcing and offshoring can raise R&D efficiency but it should also support the strategic growth objectives of the business.
PA has identified key elements that, when addressed effectively and comprehensively, can improve the R&D network:
More R&D is taking place offshore however innovation is still centred at home
Don’t offshore your R&D just to get access to lower wage costs
Despite the risks, parts of R&D activity can steadily move offshore
Preparation must be meticulous but a long term perspective is vital.
Outsourcing and offshoring R&D is not without risk, its challenges remain high. However, the benefits are huge. Global giants sell more into China than they source and have long recognised the opportunity that emerging markets represent. Relocating manufacturing to achieve competitiveness will not sustain a business into the longer term but designing, developing, manufacturing and selling innovative products that are designed for local markets will. To achieve this, businesses need to move R&D closer to these markets – it is a question of when, where and how rather than if.
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