Abstract: In the context of electronics industry, the roles of R&D and IT component in the manufacturing process are important concerns that may influence Just-In-Time delivery (JIT) services. However, the crucial issue to be addressed in discussing the rapid development in electronics industry sector is pertinent to the main factor which triggered the subsidiary firms to gain R&D and IT component services from outside and not self-developed by the firms in location. By means of unstructured questionnaire and interview, a total of 30 electronics firms in Penang industrial areas were selected as respondents, were interviewed and studied. The findings indicate that there are factors which was neither with a cost nor with quasi-dominant cost as the trigger for externalization process among Penang electronics industry compared to the cost factors. As a way forward with a view to boost the role of local R&D and IT services provider firms, this study suggests an approach that can be adopted to enhance a positive image and experience of R&D and IT to cater to the electronic manufacturing sector demand in Penang.