Microsoft is weighing setting up an R&D facility in India to develop new software applications

Microsoft should subcontract with an Indian firm f there are not already Microsoft employees in the country. It would be very expensive and disruptive to relocate employees to another country and culture, especially if they are not willing to go.Hiring Indian employees directly also produces some challenges: they have to be trained and managed, either remotely or by relocating a smaller amount of employees. Subcontracting an existing firm has the benefit of acquiring a known entity already familiar with the language and culture. They are also less expensive than expatriates and it good build goodwill with the foreign country by providing jobs for its citizens. This method is not without its challenges, though. Microsoft will have to invest heavily in training the foreign company and be vigilant about what proprietary information it provides since foreign intellectual property laws are not always as robust as domestic ones.