Gates warns against reliance on outsourcing

Urges investing in R&D to keep competitive edge

By Paul Kallender

June 29, 2005 12:00 PM ET

IDG News Service - TOKYO -- Companies should not outsource their core business functions and staff, Microsoft Corp. Chairman and Chief Software Architect Bill Gates told a group of Japan's top businessmen today.
Gates, who was speaking at the Nippon Keidanren (Japan Business Federation), Japan's biggest and most influential business group, urged IT companies to beware of outsourcing too much to save costs and to keep their key engineering resources and intellectual property at home.
"If you rely too much on people in other companies and countries ... you are outsourcing your brains, where you are making all the innovation," he said.
The need to maintain a competitive edge by investing rather than cost-cutting was a theme that Gates returned to several times in an address to a group of leading Japanese IT and consumer industrialists that included Hajime Sasaki, chairman of NEC Corp., and Tadashi Okamura, chairman of Toshiba Corp., both of whom had front-row seats.
Too many U.S. companies were cutting their research and development budgets at a time when investment in these areas is needed to cope with an increasingly competitive global market economy, he said.
At a national level, both the U.S. and Japan need to train more and better engineers if their economies are to stay at the cutting edge of technological innovation, which would create value that helps support both countries' high standards of living, he said.
Gates cast the U.S. and Japan as competing in a global market economy that had grown from about 1 billion people 20 years ago to 4 billion people. In this expanded, increasingly competitive economy, India and China are training engineers who are driving their economies forward, yet Japan and the U.S. aren't keeping up, he said.
"The number of students in engineering and IT is going down. ... Staying ahead means setting a very high bar," Gates said.

Reprinted with permission from

IDG.net
Story copyright 2009 International Data Group. All rights reserved.

Recommend Digg Twitter ShareThis

Email Print Send Feedback Reprints

Additional Resources

POLL RESULTS

Leading IT Pros Weigh In on Top IT Issues

Accelerate your knowledge of the IT world you inhabit by viewing the results of a series of polls taken by your IT peers. These polls of 100+ IT professionals each are available for full viewing. They cover key topics such as virtualization, processor performance, green IT, cloud computing and many others. Be a part of the buzz.

WHITE PAPER

For Best Results, Think Beyond the Box

Technology is complex. Keeping it running productively shouldn't be. To that end, you want to minimize the number of solutions needed in-house to simplify operations, maintenance, and support. Kodak offers a best-practices model. One company provides support for both scanner and software, for fast problem resolution without vendor finger-pointing. Download now!

WHITE PAPER

Accelerating the Path to Demand Intelligence with a Demand Signal Repository

Utilizing demand intelligence improves the precision of pricing, product assortments, channel/store placement, and promotion, which are all essential for sustainable revenue management performance. Learn more, download this free whitepaper today.

White Papers & Webcasts

IT Vendor Management with Oblicore Guarantee
(Source: Oblicore) In the context of a global recession, companies are realizing that they need to take an active role in dealing with...

Usability Is Everything
Learn what sets Workday's HR and Payroll solutions apart from the competition....

The Rise of Service Level Management in ITIL V3
(Source: Oblicore) The third volume of the Information Technology Infrastructure Library (ITIL V3) expands the role of Service Level Management (SLM) in aligning...

The Value of Real SaaS at Workday
Cost savings, speed to value, and innovation brought to the enterprise by Workday's software-as-a-service solutions for HR and Payroll....

The Right Offshore Location May be Closer Than You Think
More and more companies today are looking for Outsourcing solutions that are flexible in where the services are delivered. For many companies with...

SaaS at Flextronics, Inc.
Dave Smoley, CIO of Flextronics, discusses the real value of software-as-a-service and why he chose Workday for his HR solution....

The Metrics Driven Organization: Your Business in Challenging Times
This white paper discusses how metrics increase visibility and sharpen decision making to ensure excellent customer service, rising revenue and growth....

Why Compliance Pays
This OnDemand webcast explores the relationship that firms with best compliance records have higher revenue, greater customer retention, lower financial losses from data...

Using Collaboration to Achieve Business Goals
This whitepaper reviews information management, CRM, HRM, project management, portals, document and workflow management and other assets that run business operations and should...

Agile Enterprise Content Management (ECM) for Rapid ROI
Find out how combining ECM and BPM will help adress issues about content rich business processes....

All White Papers | All Webcasts