Outsourcing, R&D and knowledge work - latest trends!

In a previous article, Outsourcing, virtual teams and knowledge work, I commented on the trend to outsource knowledge intensive work off-shore to developing countries. Fay Hansen, writing for Workforce Management, Where the Knowledge Workers Are, argues that we are facing a massive and unstoppable flow of R&D jobs to China, India and Russia....

Key facts which are difficult to ignore include:

  • Annual costs for a senior engineer in India are one-fifth of the U.S. cost
  • Of the top 10 auto R&D projects from 2002 to 2004, six were based in China, India, Thailand and Brazil
  • Russia is emerging as a global centre for electronic design, with 1 million scientists working in 4,500 R&D centres
  • Every year, India graduates 2 million proficient English speakers with strong technical and quantitative skills
  • China graduated 325,000 engineers last year, five times as many as the U.S.


So there are 3 options:

  1. Ignore it and hope it is a passing fad
    - the facts and the economics make this look unlikely

  2. Fully embrace it
    - this may be exactly the right strategy but it might also leave yourself exposed to IP-leak and other strategic challenges

  3. Co-Evolve with it
    - look to blend global R&D teams with a mix of talent from different locations
    - play to the different national strengths** on innovation

If you do go for option 3 then your organisational ability to use distributed global virtual teams to manage creative work, R&D and innovation will be the major critical success factor.


**For example, Geert Hofstede, an international business culture guru categorises different national business cultures using 5 axes - Power Distance Index, Individualism, Masculinity, Uncertainty Avoidance Index and Long-Term Orientation.

Whether we believe his model or not the differences are so significant, say between the US and Russia, to be fairly confident that they would have different strengths and therefore the prospect of blending distributed teams with highly complimentary skills in the area of innovation and R&D.


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