Should Medical Device Companies Outsource R&D?

IT Services in Medical Device companies has been outsourced to low cost countries for some time now. Start up companies have leveraged a global workforce to tap into R&D expertise be it in India, China or any other part of the world. In larger medical device companies its still a taboo .. R&D is best done locally, if it is not made in the US its not reliable... these are typical perceptions that exist today.

As margins of Medical device companies shrink, its only a matter of time that management will start looking at outside help. Companies like GE have done this for ages, its no rocket science its more a social fabric change in companies that management will have to deal with.

I think the first step towards understanding what should absolutely done here and what can be outsourced is to understand what is core. Following are some of the non core R&D activities that can be a low hanging fruit to offshore, with minimal resistance internally

• Replace those expensive contractors that have been there forever
• Testing of supplier parts, supplier development activities for device parts
• Feature and functionality testing of medical device software, firmware and hardware
• Portal and remote patient monitoring work that integrates with devices
• Support of legacy devices and platforms
• Integration to Hospital systems

The core biomedical engineering is something that seasoned engineer employees that are doing the above activities must move to. It'll be interesting to see how this industry that has typically had operating margin of 60-90% going to deal with the new global economy.

Till then, for the offshore service providers that have developed significant R&D and product engineering competencies.. hang in there, the tsunami is waiting to happen.