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More Companies Plan to Put R&D Overseas
According to a recent report from Ernst & Young, companies in developed nations increasingly plan to turn to emerging markets for core research and development.
Ernst & Young found that about 11% of companies based in North America now spend more than a quarter of their research and development budget in emerging markets. But within five years, more than 23% expect to have surpassed that mark.
Of companies based in Western Europe, only 7% said they conduct more than a quarter of their R&D spending in emerging markets, but about 19% plan to within five years.
Overall, 16% of respondents said they currently conduct more than a quarter of R&D spending in emerging markets and 28% plan to invest to do so in five years. In the past decade, American companies have turned from using overseas R&D centers simply to localize products, to tapping them as a source of R&D for products globally, said Anil Gupta, a strategy professor for the University of Maryland and author of “Getting China and India Right.”
“China, India, and Brazil are becoming true centers of innovation and research,” he said. Companies are still able to hire researchers for about a quarter of the salary it would take in the U.S., he said. The skills of the work forces in emerging markets also have improved, as the countries’ university systems mature, he said. Read entire article here
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