Security and IP control in R&D outsourcing

17 Jun 2010 Sandeep Mehta
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.

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