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ACS News

September 25, 2006
Volume 84, Number 39
p. 116


Outsourcing: Blessing Or Curse?

Madeleine M. Joullié, District III Director

Outsourcing is not specific to chemistry, but as a society for chemists, it is appropriate for the American Chemical Society to examine how this trend will affect its members and the industrial and academic communities. Our conclusions will determine how best to proceed in a changing society. Because board members and committees are already investigating the present situation, it is important for all ACS members to be aware of some of the advantages and pitfalls of outsourcing so that they can understand the issues. Consequently, I would like to report on a roundtable discussion on "New Trends in Chemistry Outsourcing" that took place recently at the International Symposium on Chemistry, Biology & Medicine, in Cyprus.

The panel was composed of representatives from both large and small companies. The most important message is that outsourcing is an irreversible trend. It has grown from a passing occurrence to a crucial R&D budget line, as large as $2 billion in 2006. Many partnerships and alliances are already in place. While in 2001 companies worried about how to justify a non-U.S. provider, in 2006 they worry about justifying a U.S. provider. The savings offered by outsourcing simply cannot be ignored.

Outsourcing is a phenomenon that is changing the world and presenting a challenge to chemistry as we have known it.

Additionally, production can be considerably increased through outsourcing. For example, the goal of bringing two new drugs on the market each year is difficult for a firm to achieve internally, and outsourcing is proposed as a supplement to in-house capacity. From a research viewpoint, outsourcing enhances innovation by accessing novel science and technology as well as a global talent pool in a cost-effective way. Outsourcing to China, India, and Russia offers lower labor costs than in the U.S. and Europe. It provides a source of highly educated chemists who will presumably free in-house chemists to concentrate on advanced discovery work.

Companies view outsourcing as a means to obtain technology and services at reduced cost, risk, and time to market. Nevertheless, outsourcing is not without risks. Problems that must be addressed include intellectual property protection, quality control, safety and environmental regulations, customs regulations, oversight via teleconferencing, reduced face-to-face interaction, and political uncertainties in all countries.

On the other hand, outsourcing helps the countries chosen to develop their own industries and eventually their own management. Already in the Asia-Pacific region, companies are looking for local leadership rather than expatriate executives. There is considerable evidence that other countries have well-trained, highly talented scientists who are capable of making great strides in R&D. After all, over 60% of the articles published in ACS journals come from abroad.

How will outsourcing affect the future prospects of chemists in the U.S.? The round table participants all insisted that they want to keep trained scientists in the U.S. They want to nurture their own scientists, and they do not want to see internal chemistry diminished. To support research in this country, the idea of an industry/academic collaboration was put forward to provide conceptual innovation in science. Although this support is reassuring, as an academic researcher I know that this is an expensive endeavor. With funding sources becoming scarce, it is difficult to envision sustaining the kind of pioneering research traditionally supported in large companies such as IBM, Bell, Dow, DuPont, Merck, and Hoffmann- La Roche. Modern industry is not geared to support basic science.

Chemistry departments have been criticized for training students for the world of yesterday, but I have not yet seen viable proposals for modification of the current curriculum. Sadly, chemistry departments have even been closed in some well-known British universities. If we are to prevent this occurrence from becoming a trend, what must we as scientists do to avoid a future in which fewer young people show an ever-diminishing interest in science? We must seriously consider the impact of outsourcing on the career development of future chemists in the U.S. These issues cannot be addressed by ACS alone. The future of science in this country should be a matter of highest priority for our representatives in Congress.

Outsourcing is neither a curse nor a blessing. It is a phenomenon that is changing the world and presenting a challenge to chemistry as we have known it. American chemists must be prepared to meet this challenge if we are to succeed in the future.

Views expressed on this page are those of the author and not necessarily those of ACS.

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ACS Comments, which appear in C&EN from time to time, are written by society officers and committee chairs. They are available on C&EN Online at www.cen-online.org/html/acscomments.html. Comments are archived back to 2000.

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