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Outsourcing and Offshoring of Research, Development and Engineering Grow Along with Globalization, Business and Industry Trends Analysis

The long-term relationship between Western firms (and governments) and research facilities in India, China and other nations in Asia will continue to evolve.  While many Western companies are keenly interested in selling products and services into Asian markets, there has recently been a clear increase in Western governments’ interest in retaining control over domestic intellectual property.  While there is always the potential for increased global research collaboration, such as offshored research labs, many observers are concerned about the potential permanent loss of Western nations’ vital research data and competitive advantage, particularly in the areas of drugs, computer technologies, electronics, aerospace and defense.
Over recent years, a growing global demand for technology products and for many types of engineering, coupled with the communications capabilities of the internet, have launched an R&D boom in many other nations as well.  As in China, some of this research is for locally owned manufacturers, but a great deal of it is conducted as offshoring for companies based in other nations.  These nations with growing research and development bases have recently included Israel, Singapore, Taiwan and Korea.
For example, consider Taiwan.  It invests significant amounts in R&D for a relatively small nation.  Taiwan is on the leading edge of technology-based manufacturing, and many of the world’s top-ranked corporations by R&D budget are headquartered there.  The country has great expertise, both in the laboratory and on the manufacturing floor, in such sectors as networking gear, semiconductors, computer memory and PC components.  Taiwan’s researchers are so prolific that they account for more than 5,000 U.S. patent filings yearly.  Taiwan graduates about 49,000 scientists and engineers from its universities each year—an amazing number for a nation with a total population of a little more than 23 million.  Taiwan operates three major science parks containing nearly 800 total manufacturers.
India has a need to greatly increase investments in R&D, particularly as it continues to advance into high technology manufacturing and becomes an alternative site to China for designing and manufacturing advanced electronics.  Western drug discovery and manufacturing companies are forging partnerships with Indian firms at a great rate.  For example, Eli Lilly, Amgen and Endo Pharmaceuticals have all entered into agreements with Bangalore-based Jubilant Biosys to develop potential candidates for the next blockbuster drugs.  In a surprising shift from the Indian focus on developing low-cost generic versions of Western drugs, Indian firms are now working on developing new drugs with Western partners.  At the same time, Western pharma firms are offering to share intellectual property rights on new drugs as well as a portion of the profits.  GlaxoSmithKline was the first to begin this practice in its partnership with Ranbaxy Laboratories Limited.  In addition to drug development, R&D in India is concerned with the InfoTech sector.  Microsoft’s research center in Bangalore has dozens of full-time researchers on staff who are credited with the development of a valuable search tool used by Bing, Microsoft’s search engine.  India produces about 300,000 computer science graduates per year, and about 100 computer science PhDs.
South Korea’s R&D spending is substantial as well.  Korean government leaders are focused on increasing basic research capabilities and basic sciences, particularly at research-oriented universities.
Since a great deal of research equipment and facilities are underused, a shared system that works along the same lines as Uber and Airbnb was created called Science Exchange.  Backed by silicon-valley investor Y Combinator, Science Exchange ( enables market-based collaboration between users and research facilities such as Harvard Medical School, Johns Hopkins University and the Mayo Clinic.  The exchange provides ratings and reviews to help users find the best fit with regard to facilities and expertise, and also requires each party to sign an agreement outlining expectations, logistics and fees at the start.

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