Choosing to outsource R&D rather than doing so in-house is a practice used across all industries to great success.
It is the strategy of choice for household names such as Nike. It is also a business strategy that is accessible to you and your business, no matter your scale and reach, and will present significant opportunities for long-term growth.
At Leading Edge Only, we have a keen understanding of exactly how outsourcing can benefit a business, which is why we’ve created this blog post. If you’re thinking about outsourcing for the first time, or are interested in learning more about it, then this is the perfect resource. Our top 15 reasons to outsource research and development are just the beginning and will provide a useful foundation for your next business decision.
What Is Research And Development In Business?
Research and development, or R&D, are the two phases of product creation. During the research phase, possible products or solutions are researched, planned and tested for viability and cost-effectiveness. The development phase is when design becomes reality, and a prototype or proof of concept is manufactured. R&D is a necessity for the creation of a high-quality, marketable end-product.
It can be a long, time-consuming process and the two phases are deeply intertwined, as success isn’t guaranteed in the first instance. This is why many professionals choose to outsource R&D, as it is an incredibly effective means of safeguarding your business and minimising risk.
What Is Outsourcing?
Outsourcing is the practice of using a third-party firm or individual to perform a service that you need. To effectively outsource, you need to choose a partner that can satisfy all of your requirements. Your partnership should be based on foundations of mutual understanding, trust and respect. Maintaining communication throughout your project is essential, and perhaps even more important than the logistics of the product or service. This is because in order to minimise any possible risks of outsourcing, you need to be aware that you are engaging in a transaction that is beneficial to both parties.
Top 15 Reasons To Outsource R&D
The advantages of outsourcing are huge and provide your business with extensive opportunity for growth and development. Whether you specialise in technology or pharmaceuticals, it is a process that should be carefully considered due to the short and long term benefits that your business will receive. Below we have compiled the top 15 reasons for outsourcing R&D, many of which you might not have yet considered:
Outsourcing is your opportunity to partner with an industry-leading expert, with masses of relevant experience and a highly desirable skillset. Accessing this kind of specialist talent pool means that the R&D you require will be of an incredibly high standard because the businesses are field-specific professionals and know exactly what they are doing and how to do it. It is likely that your chosen partner is a business that specifically fulfils outsourcing needs, equipping them with interdisciplinary expertise. The researchers and engineers involved in your project will be able to offer a unique perspective on your project, benefiting from a broad understanding of different data and project types.
Establishing a team that is fit for purpose can be a huge drain on resources; it is difficult and time consuming to find highly qualified professionals within your industry, and it can be expensive to find, maintain, train and retrain your existing employees. By outsourcing R&D, you will have access to an entire team that is in place and ready to begin work. This means that you only need to form and maintain one new relationship, that with your chosen partner, which is considerably less draining, in terms of time, effort and cost.
A specialist business with the experience and manpower to execute your requirements will also have access to the most up-to-date technologies needed to do so precisely and efficiently. What these technologies are exactly will vary from industry to industry, and so it is important to ascertain that your chosen partnership has access to such tools. It will mean that your end-product is of the highest quality, and means that you can use the latest developments and benefit from them hugely, without making an expensive investment yourself.
4. Reduce Costs
It is a fantastic opportunity to reduce equipment, maintenance and personal costs across the board, and generate higher revenue in the long term. It is highly likely that your business is not equipped to fulfil the demands of your new product or service, whether this is because it is outside of your area of expertise or because you operate on a smaller scale. Internal R&D can quickly become expensive, especially if it would require you to purchase new equipment, update and repair said equipment and hire and train more staff in order to operate it.
Outsourcing allows you to choose a business with the equipment and staff needed, which means that you don’t need to hire them yourself. This means that you can optimise your spending, and ensure that your money is instead directed where it will be most effective, such as R&D of products and services within your own field of expertise.
5. Tax Benefits
Closely linked to cost reduction is the benefits that outsourcing can have when it comes to tax. This varies from business to business, and depends on a number of factors, such as where your business is located, what country you are outsourcing and what services you are outsourcing. To find out more information that is directly relevant to you and your business, best practice is to seek advice from your relevant government body. In the UK, the government has made available tools and resources for business and self-employed.
6. Accelerate Time To Market
Time to market refers to the period between the initial product idea and its appearance in the marketplace. A swift time to market is essential for businesses that want to remain competitive, and provide customers with the next best product or service that they are looking for. The entire focus of the business you partner with will be to complete your project. Being their top priority means that your end product will have a significantly shorter time to market than if you chose to use in-house facilities. You have your own specific business focuses and specialities, and would need time to gather the necessary team, while outsourcing R&D means that your partner can begin work immediately.
7. Access To Local Markets
Partnering with a business to meet your product needs is an investment into a local area, which makes accessing their market much easier. This is because you are inadvertently providing employment opportunities, and increasing disposable income which then re-enters the local economy. The attention and interest created by your presence is then incredibly valuable when your end-product is ready for the marketplace, as it is the first step to establishing a relevant customer base.
8. Access To Global Markets
If you choose to offshore R&D, you will receive the additional advantage of easier access to international trade as you enter global markets. Conducting services overseas can lower costs, but more importantly, the diversification of location and interest make it easier to reach and appeal to multinational clients. This is a huge reason to begin outsourcing, especially if your business goal resides in large-scale expansion.
Your chosen outsourcing partner is tasked with completing R&D of your product or service to your exact specifications, which means that they are dedicated to providing you with a flexible, comprehensive service. Most businesses will have a system in place that ensures your work is completed on plan, on time and on budget. It also means that if any of this changes, they will alter their approach accordingly to continue fulfilling their role within the partnership. You therefore benefit from flexibility and innovation which would be difficult to achieve in-house, without proper systems in place.
10. Avoid Capital Investment
This is especially important if your project is not directly related to your ordinary business and expertise. Investing in equipment, staff and training for a single project is massively expensive, and not very good business practice. By partnering with a specialist business equipped with the necessary resources, you are avoiding making a long-term investment into a product or service with no guarantee of its viability, market success or return on investment.
11. Focus On Core Functions
Focusing on elements of your business within your speciality is a much more effective business practice. It allows you to utilise the full extent of your skill, and the capabilities of your existing staff, while being assured that your business partner is completing the required project within their own area of expertise. You can devote your time, energy and resources to your core functions, which will ultimately allow your business to develop and grow, as it provides you with further opportunities for the innovation for which you are known.
12. Develop Valuable Connections
The decision to outsource R&D is one that requires a business partner, and marks the beginning of a mutually beneficial relationship. This is useful in making connections within your industry, and developing your brand recognition and reputation with potential colleagues, clients and customers. It could also be the first step towards establishing a consortium if you would like to establish a permanent working relationship within which you can seek advice and pool resources.
13. Risk Management
Not all products make it past the design phase, and similarly, not all products are successful upon entering the marketplace. Outsourcing R&D mitigates possible financial risk, as it means that you are not making a large investment into technology and internal staffing that does not generate a return. It is also much easier to control an external team, especially if your partnership is contractual, with both sides subject to legal obligations. This can also be really useful in ensuring security and workflow.
14. Competitive Advantage
It allows you to stay ahead of the competition, which is incredibly important when it comes to the highly competitive nature of the marketplace and the increasingly innovative products and services that are available. It means that all of your projects, both internally and externally, are being completed by experts, using advanced technology, which not everyone will have access to. Gaining a competitive advantage and presenting yourself to customers and potential business partners as the strongest choice are crucial when seeking expansion and a high turnover.
15. The Future Of R&D
Outsourcing R&D provides you with access and insight into how leading businesses operate and allows you to benefit from their unique practices, procedures and services. This is incredibly useful when predicting the future of R&D, and making internal decisions on best practices and viable investments. Partnering with a forward-thinking business is your opportunity to capitalise on their advancements, and futureproof your own business. R&D World magazine predicts that the future of R&D includes automated processes, automatic data collection and minimal researcher presence, and so maintaining a connection with leading businesses will allow you to remain ahead of the curve.
How Can Leading Edge Only Help?
The extensive advantages of outsourcing R&D make it easy to understand why so many businesses choose to do so. It is a fantastic opportunity to futureproof your business, save money and surpass your competitors. Doing so effectively is simple, as long as you form a solid partnership and maintain constant communication and understanding.
Finding the best business to partner with can seem intimidating, especially when reaping the above benefits of outsourcing is reliant upon their mastery. Leading Edge Only specialises in pairing innovative solutions with business challenges, making it faster and easier to establish an outsourcing relationship than trawling through the web.
LEO can promote your business challenge and connect you with a network of experts. World-class, industry-leading innovators can then showcase their possible solutions, providing you with a huge selection of possible partnerships through which you can outsource R&D.
If you would like to discuss your research and design requirements, and the kind of partner you are seeking, then please don’t hesitate to get in touch. A member of our friendly customer service team will be happy to discuss your options further and provide any information you need for clarity and peace of mind. Contact us today, by phoning 01234 756 015 or emailing [email protected].