Changing paradigms of Outsourcing R&D - By: Anand Kuppuswamy

The drivers for Offshoring R&D have changed significantly in the recent few years. While cost reductions from lower labor costs still has a significant influence in promoting offshoring R&D, other factors such as expertise of the external organization and heavy workload, among other factors, are increasingly driving this trend at the helm.

A survey on Outsourcing R&D featured in the R&D magazine* indicated that the primary reason for Outsourcing R&D was that the external organization had more expertise, with 52% of the nearly 400 respondents citing this factor. Further, with 39% of respondents citing manpower shortage and 37% citing heavy workload, reduced R&D costs was a distant fourth with just 33% of respondents citing it as the most important reason for outsourcing their R&D.

Other factors that were cited by respondents as the most important reasons for Outsourcing R&D included, one-time development (25%), past experience (22%), more support from outsourcing (22%), faster time-to-market (20%), and strategic policy (16%).

Outsourcing R&D: More than just cost savings

Over the years, companies have realized that Offshoring R&D means more than cost savings resulting from moving work to a lower-cost location. Outsourcing R&D is now increasingly being used to accelerate organization change and enhance organization effectiveness. Among the other benefits that have increasingly caught the attention of enterprises are:
- 24/7 global R&D resulting in enhanced productivity
- Shorter development cycles resulting in faster time-to-market
- Efficient resource utilization resulting in enhanced focus on core activities and increased flexibility in responding to market changes
- Access to technological and process innovations resulting in significant quality improvements and organizational effectiveness

At Celstream, we speak from experience and from first-hand knowledge in successfully enabling global technology companies leverage the comprehensive benefits of offshore R&D. We have been able to do so by educating out customers and working closely with them to plan, scope and execute their Offshoring R&D strategy.

About Celstream Technologies Ltd.
Celstream Technologies is a successful, global Product Engineering Services company with a rich heritage in offering Networked Product R&D services. Celstream offers complete product life-cycle development services to technology companies in the Media & Entertainment, Consumer Electronics, Print & Publishing, and Enterprise industries. Headquartered in Bangalore, India, and with customers in the U.S.A., Europe, India and Australia, Celstream combines the best software talent, world-class processes and cutting-edge technology expertise to deliver engineering excellence to customers. More information on the company can be found at http://www.celstream.com.

About the Author

* R&D Outsourcing Becomes More Strategic, June 2007 issue of R&D Magazine, Product R&D services

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