Manufacturers that perform high-tech research in China and India aren't necessarily pursing a strategy for eliminating U.S. jobs, reports a management advisory service facilitating trade between the West and Asia.
There are a lot of reasons for performing R&D in Asia, particularly for companies in the medical device field, but outsourcing American jobs isn't among those reasons.
So says Gunjan Bagla, a managing director at Amritt, Inc. in Cerritos, Calif., a management advisory service facilitating trade between the West and Asia. In a presentation to be given at the upcoming MD&M West 2014 conference, Bagla plans to explain that the primary motivation for farming out R&D to Asia has little to do with costs, especially for manufacturers in medical technology.
"Medtech manufacturers can get more new product work done if they if they use engineering from low-cost countries, but the reason has nothing to do with lower costs," says Bagla. "Medtech companies don't lay people off when they do R&D in China and India. They free up their U.S. engineers to work on higher value projects. Stuff that presents more marginal revenue opportunities or older products are good candidates for an Asian R&D effort."
There are special reasons that medtech companies in particular should consider Asian R&D, says Bagla. "Medtech is more R&D intensive than other areas. And medical technology in China and India is vastly different from that in the U.S. and Europe. So engineers living in Asia may come up with solutions that are completely different from those you might find in the West," he explains. "In some cases, what they come up with might not translate into something valuable in the West, but sometimes these radically different ideas can benefit the whole company. Firms that are sensitive to this possibility are investing a lot of effort into understanding the mindsets of Indian and Chinese engineers."
But there is a trick to finding the right kinds of engineers in Asia, says Bagla. Though only a few engineers in those countries come from premier engineering institutions, the talent pool extends beyond those schools. "Not all talented engineers in India graduated from Indian Institutes of Technology," says Bagla, who is himself an IIT grad. "IIT grads make up perhaps 5 to 10% of the talent pool that medtech companies can draw from. Those engineers also tend to be expensive and demanding. They can get jobs anywhere in the world. But sometimes they are not the right fit."
Bagla says regardless of where engineers come from, companies must evaluate their skill set and determine how well it fits with corporate goals. "There is plenty of talent out there if you know where to look,:" he says. "There is also plenty of bad talent out there, but I think that is true in the U.S. as well."