Yale Global Online magazine has an interesting article that reinforces strong processes and security in R&D outsourcing: Google’s Lesson: Innovation Has to Be Accompanied by Reliability. The article distills lessons learned from the Google-China incident and points out that that manufacturing outsourcing will continue, but needs controls for IP:
Outsourcing of manufacturing will continue, but it must do so under much tighter monitoring of the transfer from intellectual property to production.
I was talking with a large US manufacturer moving production lines to China. Besides IP exposure, the company actually found that they needed new processes to link US R&D to manufacturing. When the manufacturing was in-house, R&D team members could walk over and see how manufacturing was doing of vice-versa. None of that was possible when manufacturing was in a different country.
Actually moving production and R&D, not just connecting them virtually, can have a negative impact on security.
Furthermore, R&D outsourcing is different from manufacturing and control of IP is much more difficult. R&D is essentially a process of manufacturing (creating) knowledge on how to manufacture widgets. Once the knowledge is with people, it is difficult to remove it. I have heard of Japanese strategy of keeping key component manufacturing in Japan and thereby protecting their IP. That will not be possible when R&D or parts of R&D are outsourced.
The lesson for the IT industry is that security has to be a primary concern in the next generation of innovation.