Research and Development expenses are often tax deductible. But it is important to understand what kind of research activities are deductible and which ones are not.Generally, things like market research or an assessment of historical information are not deductible.

A company can use research to identify leaner and more cost effective means of manufacturing. This reduction in cost can either help provide a more reasonably priced product to the customer or increase the profit margin.

When an investor sets out to put their resources into any company, they tend to prefer those who can become market leaders and innovate constantly. An effective R&D function goes a long way in helping to achieve these objectives for a company.

Through R&D based developments, companies can acquire patents for their products. These can help them gain market advantage and cement their position in the industry. This one time product development can lead to long term profits.

Often companies need to innovate in non-product areas. However, they have no experience or expertise in creating software or apps, and therefore decide to outsource this to a company who has the expertise, whilst maintaining full control over the innovation of its products

It is extremely rare for all of the most talented individuals in a particular market or industry to be work for the same company. This enables a company outsourcing R&D to gain access to a more global talent pool.

If you’re considering creating a new product and releasing it in another country, outsourcing R&D in that particular country may help to give you a competitive advantage.

When it comes to undertaking completely new R&D projects that are unlike anything that you have done in the past, or if this is the first time your company is investing in R&D, it can be much cheaper and faster to look at outsourcing options rather than setting everything up in-house.