The Economist Intelligence Unit says that rather than maintaining R&D as a central function, companies are adopting a “global innovation network” model and sending aspects of their work overseas.
The “Sharing the Idea: The Emergence of Global Innovation Networks” report found that 65 per cent of companies current perform at least some parts of their R&D tasks overseas, a figure expected to grow to 84 per cent in three years.
Similarly, 65 per cent of organisations say they currently outsource part of their innovation process, which is likely to grow to 75 per cent in three years. Though the report focuses on UK companies, the trends it identifies are thought to be common across companies in developed economies.
Companies found that disaggregating R&D globally had advantages in greater efficiency, speed to market and access to talent. But the respondents said there were also challenges related to the global innovation network model – most notably the concerns about loss of control.
Some 44 per cent of companies surveyed were also concerned about theft of intellectual property as a key concern in using the global innovation model.
“Increased competition, the cost and complexity of innovation and a surplus of ideas are encouraging many companies to restructure their approach to research and development,” the report’s editor Rob Mitchell said.
“Our survey shows a considerable shift towards greater outsourcing and offshoring of R&D in what we term a global innovation network model, despite concerns about loss of control over a function that is often considered core to a company’s identity,” Mr Mitchell said.
Cost was a primary driver for companies using the model. While 70 per cent said their management viewed investment in R&D as vital to the company’s success, the R&D function was increasingly under pressure to curb costs nonetheless.
The other key driver to using the global innovation network model was that shortages of specialist talent in home countries meant that companies looked further afield to destinations where skills were in greater supply and more affordable.
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