Today’s New York Times looks at outsourcing to India and China in two very different ways. Steve Lohr examines the increasing willingness of American and European businesses to outsource high-paying, knowledge-intensive R&D jobs. The Times’ Saritha Rai — whom I would really love to meet — warns that Indian outsourcing firms may not be up to meeting the growing demand for qualified workers.

A new study that will be presented today to the National Academies, the nation’s leading advisory groups on science and technology, suggests that more and more research work at corporations will be sent to fast-growing economies with strong education systems, like China and India.

In a survey of more than 200 multinational corporations on their research center decisions, 38 percent said they planned to “change substantially” the worldwide distribution of their research and development work over the next three years — with the booming markets of China and India, and their world-class scientists, attracting the greatest increase in projects.

Whether placing research centers in their home countries or overseas, the study said, companies often use similar criteria. The quality of scientists and engineers and their proximity to research centers are crucial.

The study contended that lower labor costs in emerging markets are not the major reason for hiring researchers overseas, though they are a consideration. Tax incentives do not matter much, it said.

Instead, the report found that multinational corporations were global shoppers for talent. The companies want to nurture close links with leading universities in emerging markets to work with professors and to hire promising graduates.

“The story comes through loud and clear in the data,” said Marie Thursby, an author of the study and a professor at Georgia Tech’s college of management. “You have to have an environment that fosters the development of a high-quality work force and productive collaboration between corporations and universities if America wants to maintain a competitive advantage in research and development.” . . .

The globalization of research investment, industry executives and academics argued, need not harm the United States. In research, as in economics, they said, growth abroad does not mean stagnation at home — and typically the benefits outweigh the costs.

Still, more companies in the survey said they planned to decrease research and development employment in the United States and Europe than planned to increase employment.

In numerical terms, scientists and engineers in research labs represent a relatively small part of the national work force. Like the debate about offshore outsourcing in general, the trend, which may point to a loss of competitiveness, is more significant than the quantity of jobs involved.

The American executives who are planning to send work abroad express concern about what they regard as an incipient erosion of scientific prowess in this country, pointing to the lagging math and science proficiency of American high school students and the reluctance of some college graduates to pursue careers in science and engineering.


MUMBAI, India, Feb. 16 — India’s leadership in global outsourcing may be in jeopardy unless it increases its supply of skilled workers, according to executives gathered here for an foindustry meeting.

Experts at the meeting of Nasscom, the country’s outsourcing group, said Thursday that an incipient skills shortage was the biggest threat to the industry’s blazing growth. . . .

“The irony is that while the outsourcing industry partially fueled an economic boom amongst the middle classes, the growth has now spilled onto other areas offering ambitious young college graduates an array of job options outside of the outsourcing industry,” said M. S. Krishnan , professor of business information technology at the Stephen M. Ross School of Business at the University of Michigan. This, too, is putting an unexpected dent on the outsourcing talent pool, he said.