As the decade began, Cisco Systems initiated a no-strings-attached program granting select universities $20,000 to $100,000 to conduct basic IT research. All rights to the results of the research would belong to the universities. Though Cisco hoped the universities would share the results, the networking vendor didn't make that a requirement. And all the funding went to American researchers.

Times have changed, and Cisco now gives about a quarter of all its grants for university research to schools overseas. "Good ideas can come from anywhere," says Graham Holmes, Cisco's senior manager for global higher-education strategic technology programs.

Software programmers for years have faced the threat of their jobs being sent offshore to lower-cost locales such as India. Now the global competition of the IT economy has a new front: corporate-funded academic research. Some U.S. universities get as much as a third of their IT research budgets through grants from large IT companies such as Cisco, Hewlett-Packard, IBM, Intel, and Microsoft. Equally valuable, the relationships keep researchers close to the latest IT priorities.

But today, IT research funded by U.S. technology vendors is far more likely to find its way to campuses in Asia and Europe than it was a few years ago. The vendors aren't just looking for cost savings. Universities in other countries often haggle less over who owns the intellectual-property rights of that research. Perhaps most important, these IT vendors know their futures hinge on growing sales in booming economies such as Brazil, China, and India, so building university-research ties there can be a smart, cheap way to gain better understanding of vital markets.

A Few Examples >> Microsoft Research this fall unveiled a $1.2 million program aimed an empowering academic researchers worldwide to tackle technological challenges that would positively affect health, education, and socioeconomic conditions.

>> IBM, along with the Siberian branch of the Russian Academy of Sciences, is building an advanced research center at Novosibirsk State University to create a health-care IT infrastructure using open-standards technologies. The company also is funding research at two Hong Kong and two Shanghai universities to develop an infrastructure to create radio-frequency identification supply-chain services and applications to manage logistics.

>> HP recently pumped thousands of dollars into nanotech research at schools in China and Russia.

>> Cisco participated in a $250,000 program to research renumbering of Internet addresses for IPv6 conducted at two European universities.

American universities aren't starving. In 2003, the last year for which the National Science Foundation has data, about $363 million in nongovernment research support for computer science R&D went to the 100 top-spending schools. University of California, Berkeley, recently said that Google, Microsoft, and Sun will donate $7.5 million for the study of Internet applications.

But globalization is a strong catalyst for American IT vendors to invest more in university research abroad. Revenue from countries such as Brazil, China, India, and Russia has been increasing at double-digit rates in recent years. IBM operates in 75 countries. "We're not trying to turn from the U.S. universities, but what we're trying to do is to expand our business," says Lou Masi, IBM's manager of university relations. "And, as the business expands in emerging countries, just like the need to work with U.S. universities, there's a need to work with universities in India or China. That's going to happen."

U.S. universities need to recognize they're in a global showdown for research dollars. But sometimes they're their own worst enemies in landing such funding. The culprit: The conflict over who gets the right to collect royalties on patents resulting from vendor-sponsored university research.

Non-U.S. university researchers generally are more interested in the grant cash, so reaching agreements with foreign academic researchers takes at most a few weeks. HP recently took two years to reach an agreement to fund nanotechnology research at UCLA, says Wayne Johnson, VP of worldwide university relations at HP. Such delays don't fly in a fast-moving IT marketplace. "It's a difficult topic, because there's a belief that there's money in this for the licensee," Johnson says. "But the corporations typically aren't even sure there will be intellectual property. So the end product of this is tremendous delays."