By Dan Ilett, 9 August 2006 16:20
NEWS
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.
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1. Brian Murray
This seems almost a bizarre move!
But thinking it through from a purely superficial perspective you see the logic, even if fairly thin, in tasking out such a high-cost function from an organisation which produces little short term return. Indeed you could even argue its highly specialised so why not get specialists to do it for you ... ironically isnt this reminiscent of the rational behind our academic centres - before we decided to strangle their funding ofcourse!
Obviously there is a strong link to the previous article (http://www.silicon.com/cxoextra/0,3800005416,39159129,00.htm) where is was pointed out that such short term thinking and lack of ambition (http://management.silicon.com/government/0,39024677,39159020,00.htm) will give, or even drive, what intellectual capital we have left away ... what do we want to be as a nation in 25 years time? - a collection of finance houses and service companies?
Perhaps following China's example and climbing up the value chain, rather than down it, would be wise! (http://management.silicon.com/itdirector/0,39024673,39161226,00.htm)
We will reap what we sow here, but by the time we do those responsible will have sold out and set up shop on a private beach somewhere no doubt!