More Companies Plan to Put R&D Overseas

As far as outsourcing stories go, I find this one to have a very nice silver lining for developed countries.

R&D is not factory floor oppressive work for people who have no options and often little political power. It is the domain of the intelligent; people with options who are more fully aware of what their options are. IOW, a true middle class. The more the thinking class grows the better all of us are.

R&D is not a zero sum game like manufacturing. With manufacturing there is only so much demand for the manufactured goods; only so much material with which to make the goods etc. With R&D the only limiting factor that comes to mind is the size of R&D budgets. It is relatively easy to increase the size of that pie if R&D brings results.

This class of people will be in a better place to act on opportunity as well compared to the low payed laborers whether it be to move to more developed countries once they have some valuable experience or to take their ideas and experience and create enterprises on their own or to simply demand higher compensation with these other options in mind. I'd bet they'd also have more political clout as well.

In short, more R&D in these countries will accelerate parity with their counterparts in more developed countries and might even pull their labor class with them.

Wait, wasn't R&D the piece of a corporation's work that was going to stay in the US, because every worker here was talented, good at problem solving and so forth?

As someone who has gone through offshore outsourcing and offshoring, I can offer a couple of thoughts.

1. Just like in the US, quality is dependent on the people you hire (duh).

2. In India, unlike the US, it seems the more oversight you offer (while observing #1), the better the results. In the US, you generally hire smart people and get out of the way. In India, I found it was necessary to do high touch dev....I don't think this is a result of developer quality, but rather shared understanding and culture. In the US you can say "we are doing X b/c of Y sorta like Z" and usually you can get to the point without being too explicit. That is lacking, making MORE effort needed to communicate. Again, not a bad thing, just a point.

3. I never, ever understood thinking offshoring to a place that doesn't speak your native language (well) AND has a huge timezone offset was a good idea.

The absolute best experience I had and will constantly advocate for US companies is to use New Zealand. Native English speakers, 4 hour (and 1 day) offset from SF... a place your developers would LOVE to visit to train people. About a 1/4 - 1/2 the cost situation as well, so bang for the buck is usually much, much higher than China, India and Vietnam where timezone and language is usually a problem.

Note the bit about Infosys establishing comprehensive training programs, implying they are taking STEM graduates and bringing them up to speed on the current technologies. 30 years ago Intel had training programs (I don't know if they do now). So did Apple in the late 80's. (n.b., I was employed by both). Now the expectation for many large employers is that the applicant have already mastered the technologies. "No training for you!"

How much is attributable to "R$wages + R$cost of training" < "US$ wages" I cannot say.

I think there is a little bit more to this atricle than just a simple push for moving r&d to emerging markets to get cheaper labor. For example, I heard some pharmaceutical companies bhave started developing labs in Russia, not to reduce costs, but as a way to make it easier to get past a lot of beaurocratic red tape. I had heard there were some laws requiring the company to use only Russian companies in the transportation of their pills, the pharma used some companies not approved by the state, and thus were slapped with some big antitrust suits. In order to make the suits go away, they set up a big, rather costly, lab facility, and then they didn't have to worry any more about these regulations. (I heard the story recently on NPR, but I can't find a link to a written story about it).

I guess what I'm getting at, is that I wonder how much of these R&D facilities are being set up as a way to reduce costs as some people are speculating, and how many are being forced in order to side step red tape and continue pushing their products into new markets?

This should be a wake up call. What about north american universities? Aren't they the best?

Maybe, but they're not affordable to every american. This countries subsidize upper studies so their citizens can access this kind of education.

I think is just a matter of priorities. Instead of spending so much on X thing, spend more on scholarships for the top students in the country in specialized science areas. Universities know how to compete.

"Five years from now, Mr. Wadhwa said he believes Indian workers will be developing software on par with programmers in Silicon Valley."

Russian/Estonian/[insert any country] are doing that for a while. Just not in their own country, but in Silicon Valley (50% of Silicon Valley startup has at least one founder that's not from USA). For creme de la creme products you need more than just good Indian "worker".

I thought part of the globalist/"free trade" snake oil was supposedly that we ship the dumb jobs to the third world, and all of us here in the US become programmers and scientists though some magic process.

I've kind of always felt like R&D is the heart and soul of silicon valley. It'll be a shame if things pan out this way.

The giant sucking sound has become deafening.

PSA: outsourcing, offshoring, and offshore outsourcing are all different things.

What the WSJ article was describing is offshoring.