Availability of a huge talent pool: Countries like India and China continue to be important suppliers of intellectual property, since they have an abundant supply of talented technical and engineering graduates. Jeffrey Phillips, a senior leader at OVO Innovation says, “Soon, countries like India and China will do what Finland has done – match the US in innovation research and output, no longer following our lead but competing with us for the innovation lead.”

Cheaper costs and infrastructure: 

Speedy delivery: Getting a new product to the market faster than a competitor is absolutely essential. James Brian Quinn, Professor of Management at Amos Tuck School, Dartmouth College says, “Companies can get to market faster through outsourcing and avoid time delays in hiring, infrastructure development and internal resistance to new ideas. “ He also feels that smaller companies that take in the outsourced work, are often more flexible, nimble and objective than the larger companies themselves.

Development risks are lowered: Outsourcing R&D and Innovation can help larger companies to reduce development risks for every desired innovation. On the other hand outsource suppliers can spread risks across multiple present and future customers. According to Professor Quinn, “The Company that outsources upstream and partners downstream significantly lowers its innovation-adoption risk.”

Specialized aptitudes: Larger companies often decide to outsource R&D since they may not have the motivation or depth of knowledge in all necessary technical fields. Peter Chow, President of HTC, a company which creates and manufactures smart phones for service providers such as Vodafone and Cingular echoes this concept when he says, “We have the capability to integrate all the latest technologies. We do everything except from the Microsoft operating system.”

Outsourcing R&D and Innovation helps companies out-innovate their competitor and sustain their leadership position.