Executive Summary (This is a document excerpt)

Product development is poised to undergo huge changes in the next two years. From headquarters-centric R&D centers, firms will instead globally distribute their R&D structure to more effectively enter new geographic markets. To sell in local markets, firms need to leverage local design centers much more than in the past. These regional centers not only understand local flavor but also provide cost savings and help companies to restructure their R&D approaches. In addition to globalization, firms face other significant R&D challenges: new-product design budget pressure, evolving market dynamics, and user demands shifting from "next cool feature" to "value for money." To address these trends, R&D needs multidisciplinary capabilities as the technology underlying the products becomes heterogeneous. These challenges have led many OEMs to strengthen their interest and commitment to offshore R&D outsourcing. Sourcing professionals need to address these trends by identifying the right providers, educating engineering functions to use offshore more, and reassessing their balance of provider capability, global scale, and costs.

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