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Why more and more American companies are setting up R&D base in India and China
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Why more and more American companies are setting up R&D base in India and China

The next big innovations in American companies are more likely to emerge from farther away nations like India, China, and Russia, than in Silicon Valley and elsewhere. More than 200 U.S. based publicly listed companies with budgets that go beyond $100 million annually have flocked to these far-flung destinations to set up an R&D base.

It’s not cheap sweatshop labor that these companies are coming for, it is rather the hulking intellectual power of skilled engineering talent in these nations. Below are a few significant insights that will dispel common myths tied to global R&D initiatives.


In a quest to cut down costs per engineer, newer and newer players are steered into using engineering and R&D resources from India and China. Albeit, companies that are most triumphant with global engineering have largely different motivations beyond cost reduction.

Some of these companies have vastly different motivations beyond slaying costs. It goes without saying that when a company starts with a global engineering operation in a faraway nation, the expenses go up from 6 to 12 months. Sometimes, global engineering initiatives are more risky than a start-up, and can easily fair to deliver expected results. The key success factor that separates global players from the rest is that these companies do not look up to short-term cost-reduction as a long term strategy. It’s much more than that – the key strategy is to find the right balance between talent and skill next to the cost.


A few companies today make the significant decision of transferring strong leaders from headquarters to offshore R&D locations, while some hire from India and China. One needs strong company managers to set up remote sites. Local terms need to be given enough rope to make their own decisions, which will further drill enough confidence and help them grow. Additionally, a senior leader’s presence across sites is a significant part of integrating teams.

Companies with successful global R&D operations realize that there should be enough mindshare and budget for such travel and team building activities.


In order to make global engineering productive, hiccups such as location, time zone, and work culture and so on need to be bridled. A remarkable number of global operations wane especially, when the right tools and practices are not used efficiently.

Successful companies provide local autonomy, they enable managers to work across time zones. Moreover, they invest in telepresence across all R&D sites in addition to infusing a standardized product development life cycle process. Video conferencing is one of the many essential tools that makes collaboration between remote teams convenient.


Successful companies invest in grooming future leaders at offshore R&D locations. Professionals at offshore locations can recognize the difference between companies that are simply seeing their offshore team as a commodity and those that provide a career growth and challenging work. Companies don’t need to brush aside undesirable work to offshore locations. This would simply lead to attrition.

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