Spring/Summer 2005

COVER STORY Wake-up Call for Innovation Georgia Tech's New Commercialization Initiative R & D Outsourcing In Brief

IN THE 1990s, corporate America began contracting information-technology services out to other countries. Now there’s a new outsourcing trend as U.S. firms take their research and development (R&D) activities overseas.

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“Innovation itself is being outsourced,” says John McIntyre, executive director of Georgia Tech’s Center for International Business Education and Research. Instead of doing R&D in-house, a number of companies like Motorola and Dell are buying complete digital and electronic designs from Asian developers, he says.

Less about cost-saving, this trend reflects the increasing number of skilled researchers in other countries and the rise of technology clusters (geographic areas with a heavy concentration of R&D infrastructure, such as companies, talented workers, training facilities and distribution centers).

 “We’re moving away from a world of command-and-control to collect-and-collaborate,” McIntyre says. “Firms are looking for talent and opportunity, regardless of where it is.”

Is this globalization of R&D a progressive strategy or are U.S. companies merely asking for trouble?

“R&D is viewed as the furnace of competitiveness,” McIntyre says. “So it may seem like we’re giving away the crown jewels. Yet companies aren’t outsourcing R&D to grow smaller. They’re doing it to grow larger.”

The result should be more jobs everywhere, he says: “Granted, not all those jobs may be in the United States, but that doesn’t mean it’s a zero-sum game. Just because a job is created in Malaysia doesn’t mean one is lost in the United States.”

McIntyre believes that R&D outsourcing is only a threat if the United States drops the ball on the high level of innovation. “Our challenge is to focus on next-generation products that are more knowledge-intensive and require more creativity,” he says.