Internationally, licensing is the most important method by which to source external technology between different international entities. U.S. companies tend to use suppliers as the most important source of external technology. In contrast foreign countries typically rank suppliers further down the list. Thus although US companies may be listening to their suppliers more effectively, foreign entities appear to be listening to their customers more closely as a source of technology. This contrast is especially true when comparing US and Japanese technology sources. Japanese firms seem to be using external technology to supplement, or extend, internal development, whereas the US approach seems to be directed more towards buying the capability to add to internal efforts. Illustrating this point, contract research is ranked highly by the Japanese firms, while acquiring a company out right is common for US firms. A counter explanation is that the US approach can be driven by a higher level strategy, such as short-term shareholder returns, rather than for technology sake.
The increasing use of offshore outsourcing is been enhanced over the past two decades with the advent of the Internet and online conferencing. This is fundamentally changed the economics of outsourcing and off-shoring. In typical IT scenario use of offshore software development groups can create savings often in excess of 50%.
Although communications technology has greatly improved the effectiveness of outsourcing internationally, some barriers in risks do remain. The most prominent risk is that of having the technology being developed leak into the hands of third parties. Thus companies in many tier 1 countries are careful not to source their breakthrough or next-generation innovation efforts internationally. The laws governing secrecy, employee obligations, and damages from inappropriate loss of confidentiality vary widely around the globe. As such most internationally sourced projects are focused on incremental technology and market development goals.