Despite increasing evidence that US companies are not achieving the types of cost savings they anticipated when entering into outsourcing contracts, in the field of Research and Development the savings still heavily outweigh the costs. While in some fields the wage differentials have shrunk to the point that including administrative costs in offshore outsourcing makes it hardly worthwhile, R & D continues to offer huge multiples for western firms. The profitability of such contracts is evidenced by the more than 500% growth of Indian pharmaceutical firms in recent years, a rate driven primarily by western outsourcing. Business Standard Reports:

"While the average R&D cost in the US is $400,000, it is $250,000 in Europe and only $50,000 in India," said Motti.

Source: www.blogsource.org/2005/04/r_d_outsourcing.html

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