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R&D Starts to Move Offshore
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March 01, 2004 (Computerworld) -- As corporate America becomes increasingly comfortable with offshore development, it's sending substantially more sophisticated IT work overseas. Companies such as Google Inc. are turning to foreign workers not for their willingness to work for lower wages but for their technological prowess.
Google is advertising for highly skilled IT help at its recently opened research and development facility in Bangalore, India. These employees will be involved in all aspects of Google's computer engineering work: conception, research, implementation and deployment.
"Bangalore is the so-called Silicon Valley of India, and there is a large pool of talented software engineers there," said Krishna Bharat, Google's principal scientist.
R&D is core to most companies. They guard it carefully, and their brightest people work on it. But as offshoring becomes increasingly commonplace, companies are moving up the value chain, using foreign workers in ways that make them a more integral part of the corporate identity.
Silicon Valley venture capital firms are encouraging start-ups to send their product development work overseas, said Marc Hebert, a vice president at Sierra Atlantic Inc., a Fremont, Calif.-based outsourcing firm that specializes in R&D. While Google was explicit about talent rather than cost being the driver of its offshore move, most companies are equally keen to tap the lower wages, which enable them to hire more people to bring products to market faster.
Hebert said that although idea generation and funding are still coming from the U.S., more and more of the R&D work needed to actually bring a product to market is being done offshore. "That's the really interesting trend," he said.
What that means for the future of Silicon Valley and IT development in the U.S. is unclear. But while overseas firms are hiring, the IEEE-USA said last week that the 2003 U.S. jobless rate for computer scientists and systems analysts has reached an all-time high of 5.2%.
The Asia Connection
Although the number of R&D jobs that have moved to Asia doesn't yet approach the number of low-end IT jobs that have moved, such as those in programming, the gap is bound to narrow, said Bob Hayward, an Australia-based senior vice president at Gartner Inc.
"There's a certain amount of inevitability about it," Hayward said, noting that the highly skilled Asian workforce and the leading role taken by those countries in developing cutting-edge services and technologies, such as broadband Internet access and flat-panel technology, have attracted the attention of U.S.
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