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Outsourcing and The Devaluation of Intellectual Property
Protect IP & Develop Offshore Resources
I applaud Mr. Brown for his effort and thoughts on the article. I will not argue with his conclusions, but with his assumptions. I would like to point out several flawed implicit and explicit assumptions on which his argument is based.
1. Assumption: IP = 100% Intangible Assets.
Mr. Brown implies that intangible assets are only intellectual property. This is simply not true. Companies that produce the most patents do not automatically increase their market value. Applying that information to specific market needs creates value. That market may not be addressable by a US company in a foreign country so in losing the IP, they are losing sales they would never have had anyway. Hence, it is questionable that they lose any real value.
2. Assumption: All people in foreign countries steal intellectual property.
The range of theft differs greatly from country to country. Proper policies, due dilligence, and active monitoring can go a long way to preventing your IP from being stolen. In fact, sometimes a company can protect its IP better offshore than in the US, because often there is no immediate competitor with a market or capital to apply that IP. I have worked on very sensitive projects with proprietary IP and it has not gone outside our company even as our company opened offices in Asia and Australia. All governments understand that without IP protection they will not be able to develop a domestic market, because no one will produce products for their market. Litigation is an option in several larger countries and foreign companies can expect to have a fighting chance at winning especially in WTO member countries. If you truly care about this issue, hire a US based offshore development company that has and do your due dilligence. Ask for an insurance policy that idemnifies them.
3. Assumption: Offshore development arises out of short term planning.
Moving an operation offshore usually creates short term costs (investment). Companies that move operations offshore do it with an assumption for long term gain.
4. Assumption: Technology transfer hurts the United States.
Where is the evidence of this? Do Japanese cars hurt American consumers, or the US economy? I would say that this is the key assumption, and it is truly a narrow-minded, and xenophobic assumption. It is in our best interest to develop new, clean, efficient technologies and transfer them to the rest of the world. They need our help to develop their economies so that they can control the problem of global poverty, deprivation and pollution. We do not become poorer if they become wealthier, quite the opposite. They may have more money and resources to buy our services and products. I fully expect that more and more S&P 500 companies in the next decade will be centered outside the United States, thus increasing the value of our stock market. This will leave us to keep innovating and moving on to bigger and better things. Disengaging the rest of the world from our economy is not an option, helping them grow the global economy in which we are also invested will benefit us.
I look forward to your comments.
Peter Dolina International IT Services www.iits-usa.com |
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