Report - Outsourcing in Next Generation Games Development

[fitbabits]

Thanks to Gamasutra (http://www.gamasutra.com) for the news (http://www.gamasutra.com/php-bin/news_index.php?story=8451).

A new report from media research company Screen Digest has highlighted a marked increase in developers outsourcing game development costs to alternative services providers, many located in Eastern Europe and South Asia.

The report, named Outsourcing in Next Generation Games Development, estimates that the market for game outsourcing, largely insignificant just five years ago, will reach $1.1 billion by the end of 2006 and is set to grow to $2.5 billion by 2010, representing around 40 percent of total game development spend.

The sudden increase is attributed to the arrival of the next generation of games consoles. Screen Digest predicts that publishers, console manufacturers and developers will be able to cap rising costs to 20 percent by keeping team sizes stable and outsourcing large projects to specialist outsourced studios. It further estimates that 60 percent of games studios outsource to some extent today, with this figure rising to 90 percent by 2008.

The report’s author, Rick Gibson comments: "Outsourcing is in wide use today, but it is not a magic wand. You get what you pay for in the trade-off between price and quality, but the real costs of outsourcing are often below the line. This is forcing the industry to undergo a fundamental shift towards stronger project management skills, which have been lacking in many organizations."
The article goes on to list common pitfalls of outsourcing, including - low quality delivery, lack of due diligence and poor briefing by clients. Benefits of outsourcing include - the reduction in development costs, accessing a flexible and temporary resource base and focusing staffs work on higher value work.

Do any of our readers in the development community have any experience of outsourcing, be it positive or negative?

[bapenguin]

Outsourcing is killing us where I work. While it is cheaper, the language barrier, time barrier makes things very difficult. On top of that the quality of the end product always seems to be less. Doesn't matter to upper management though, it's still 60% cheaper.

[51|RandoM]

Every customer initiative towards outsourcing that I've been witness to has resulted in a lower quality product then previously produced. If you just take a blind look at the bottom line, it will be cheaper, but if you extend your gaze to overall cost of doing business, you might revise your opinion---as many big businesses have found.

Remember, though, outsourcing doesn't automatically mean offshoring as well. I think offshoring of certain things can actually work quite well, if the proper groundwork is done and you're not trying to populate your round holes with square pegs, albeit cheaper square pegs.

[Mysterio]

Outsourcing is killing us where I work. While it is cheaper, the language barrier, time barrier makes things very difficult. On top of that the quality of the end product always seems to be less. Doesn't matter to upper management though, it's still 60% cheaper.

If it's international outsourcing, it's also taking jobs out of the country's citizens and putting them into the hands of foreign citizens. I think this will come full circle one day, where the jobs will once again be kept in the country. Until then, everyone's jumping on the outsourcing bandwagon.

[Citizen Philip]

North Americans are greedy pricks in general, making a game anywhere in the world will drop the cost. Of course if you aren't buying crap everyday you are a horrible citizen and should be deported to place where they respect or tolerate that sort of thing.

[Mortis]

We deal with it (non game industry), the biggest problem for us is communication. The bad thing is it's so out of hand now that most companies have no choice but to outsource or shut down.

[emperordahc]

Very cheep, but the result is so much lower. Developers here work crazy hours to do a great game; it's a sense of pride. Outsourced, it's just a job.

[Steele Johnson]

Outsourcing is killing us where I work. While it is cheaper, the language barrier, time barrier makes things very difficult. On top of that the quality of the end product always seems to be less. Doesn't matter to upper management though, it's still 60% cheaper.

I agree. In the end it costs the company more money because of the time it takes to actually get anything done has quadrupled, and since the quality is lower, there's more support and maintenance involved. Corporate greed always backfires in the end. I'm already starting to see companies decreasing their outsourcing/off-shoring and re-hiring local workers.

The problem with outsourcing game development is that you need the passion to succeed. If you're not closely knit to the designers, then the development will not go as planned and they'll most likely churn out garbage. Good luck to them.

[Yeti2005]

We've tried outsourcing on a few projects and it never worked out right. Software was built to spec but if the spec had any ambiguity then it was over. What also killed us was the lack of flexibility. If the business changed their mind on a particular issue then it was a nightmare to get it changed.

[Yama]

Even if the work is half-ass decent, there's still time wasted when artists have to clean it up and import it into the asset system. Any number of things can be technically wrong even if the asset is visually spot on, and it's extra effort and time that undermines the savings.

[Lunar Blue]

Wasn't LoZ Minish Cap done by Capcom? I haven't played it myself but from what i saw they did a terrific job.

[Roc Ingersol]

Sometimes it works, sometimes it doesn't.

Language/culture barrier and extra management/oversight costs generally eat the savings for any specialized business software and entertainment products.

[gojira]

Hmm, I wonder if this is the reason games seemed so crappy in the past year....

[jBusy]

Wasn't LoZ Minish Cap done by Capcom? I haven't played it myself but from what i saw they did a terrific job.

Giving other game companies access to your franchises is different than outsourcing.

[MosBen]

Not to be a language nazi, but "nagative"?

[ferr]

Seems like the execs are starting to feel backlashes from outsourcing in their wallets.. seems that client population decreases due to lower standards from outsourcing, which costs them more in negative profit than the savings from outsourcing. Nope, it didn't take the thousands of their neighboring citizens without jobs to convince them that outsourcing was at least ethically wrong, it had to hit their wallet.

[gzsfrk]

I work for a large IT services company (think "squirrels" =) that has an exponentially increasing offshoring component. Of course, they don't call it offshore outsourcing, they call it "BestShoring". And I have to admit that, as an IT professional (MCP, MCAD, ITIL, et. al.) this is the trend in global economics that frightens me the most and makes me reconsider a career in Forest Services. If there are no restrictions at all in place, why in the world would someone hire a programmer in America for 4x (or more) the cost when they can hire a programmer in India, Vietnam, Brazil, China, or any other second-world country to do the work? All you need is someone in the translation layer to interact with the customer

As for quality, I'll just say this. Yes, at this time, there's a significant disparity in the level of quality, by and large, when comparing domestic programming to offshore (although there are of course exceptions, such as WiPro in India--they do top shelf work all around). But this is just a matter of training and culture. There's nothing genetically special about North Americans; anyone that's willing to learn can be taught to program and program well. It just so happens that the US has had a larger pool of training to draw from than anywhere else in the world up until now.

The end result will be that demand for IT (and many other types of specialty work, such as medical, accounting and legal) performed onshore in the US and Europe will keep slipping downward relative to the second-world countries until economic equalization occurs--that is, lack of demand for labor leads to decreased wages (US & Europe) while increased demand leads to increased cost for labor (India, South America, China, et. al.). For countries that currently enjoy being in the upper half of the economic sphere, this is indeed threatening news. (Especially when competing countries like China refuse to "play fair", via manipulating currency, forced labor, etc.)

Just my paranoid .02...

[Ghost_Saint]

You guys should also realize that not only are companies outsourcing work, but 'insourcing' it as well. I interned at MBNA (Now Bank of America) as a QA tester over the past two summers and about 35% of the people we had working there were born and raised in India, and had then been recruited to come work in the US.

We didn't really have any problems with our people who immigrated, though it could be hard to understand them sometimes, but I think that was mostly because MBNA's product was focused on creating high customer loyalty, and hence the technology developement sector at MBNA almost always got their projects completely finished, on time, and of course, mostly bug free.

I think if there was a demand for high quality outsourced work than it would exist, however there is no demand for it. In the eyes of the highest managers only the profits are holy.

[fitbabits]

Not to be a language nazi, but "nagative"?
Dammit! It's a real word, honest. :)

[AniAko]

Outsourcing is killing us where I work. While it is cheaper, the language barrier, time barrier makes things very difficult. On top of that the quality of the end product always seems to be less. Doesn't matter to upper management though, it's still 60% cheaper.

I hope your bosses don't read EvAv. If they do, you better buy them a 360, and a hooker to kiss up ;)

[Mr. Lake]

Can't really say what game I'm working on, but I know that we're creating art assets in-house and a Chinese company is creating the normals and shadow maps for the art we make. It's a pretty decent system we have worked out...helps our artists a lot. The actual art stays under our control so we get the look that we want, and the costly, time-consuming task of creating the relative shaders is no longer a problem.

I think it really depends on what a studio lacks. It's a win for some studios who reccognize those weaknesses and apply more focus to what they excell at, whether it be code, art, or animation.

[Novacaine]

We've also been using ourtsourcing on our game. I've found that it changes from situtation to situation, as mr. lake stated.

It works best when there is nothing really creative about what the outsourcing company has to do. One example is making our assets here and then sending them out to get LODs made. It's just boring no creative work that can be easily verified when we get the work back. It hasn't worked so well will more creative things like, make this character based on our sketch. For stuff like that you need the art director around to give feedback and adapt to the 3D interpretation.

Another cool thing is that you don't get devs hiring people for crunch time and then laying them off. The core team can remain stable project to project which is really important. And also much of our outsourcing is in the US although we do work with guys in eastern europe and asia.

[bapenguin]

I hope your bosses don't read EvAv. If they do, you better buy them a 360, and a hooker to kiss up ;)

Fuck my bosses. I hope they do read it and realize what fucking idiots they are.

[wichenroder]

We use outsourcing. Over time the quality improved slightly, but the staff who are supposed to work on higher value things still spend half their time re-doing the outsourced material. You have to spend a great deal more time on concepts and briefs than you would if you were just working with inhouse graphics artists.. so the benefits are really slight, but enticing nonetheless in a boardroom budget meeting.

[Taco]

Outsourcing is killing us where I work. While it is cheaper, the language barrier, time barrier makes things very difficult. On top of that the quality of the end product always seems to be less. Doesn't matter to upper management though, it's still 60% cheaper.

I tend to agree with that, but it's me, the outsourced(and insourced) ones and a bunch of managers. So I'm on an island. The time barrier is almost the worst of it all.

However, I found out just yesterday the division of the company I'm in was sold off to a smaller company. Interesting times.

[AniAko]

Can't really say what game I'm working on, but I know that we're creating art assets in-house and a Chinese company is creating the normals and shadow maps for the art we make. It's a pretty decent system we have worked out...helps our artists a lot. The actual art stays under our control so we get the look that we want, and the costly, time-consuming task of creating the relative shaders is no longer a problem.

I think it really depends on what a studio lacks. It's a win for some studios who reccognize those weaknesses and apply more focus to what they excell at, whether it be code, art, or animation.

I have to agree. My company right now is outsourcing for a project because it's a once and done deal. We don't have the use to hire a bunch of full time employees, to terminate them in a year when the project's over. At the same token, we don't want to hire several top-dollar consultants to do the work. So we have done a "Onshore" approach. At least we're keeping the money in the US.

[aversion2k]

Seems like the execs are starting to feel backlashes from outsourcing in their wallets.. seems that client population decreases due to lower standards from outsourcing, which costs them more in negative profit than the savings from outsourcing. Nope, it didn't take the thousands of their neighboring citizens without jobs to convince them that outsourcing was at least ethically wrong, it had to hit their wallet.

I dont think you have any real proof of that, And I'll bet that most companys that outsource do make a profit.
Not to mention it can greatly help a smaller company start up, Giving them some experience and funding.

Thousands of neighboring citizens without jobs? errr, ok. lets say they didnt have jobs, and the company didnt outsource. Well, they still dont have jobs do they. Lets say the company does outsource and they get the contract. Now they have jobs.

[baz]

We have a big Indian office, so its kinda outsourcing, albeit. But it's quite cool, we do all the new dev and R&D, and ship all the old maintenance work to the indian office, so we get to focus on all the interesting stuff :).

What people have to do is work smarter, adopt agile development practices (i.e. regular integration cycles, Scrum, whatnot), maximise productivity and just kick arse. If you regularly hit deadlines and produce kick-arse products, you're going to be safe.

I wouldn't mind setting up an outsourcing company in my native New Zealand. It's the same time zone (24 hours shifted though) as the US, the culture is similar, the language is identical (colour v color notwithstanding) but the programmers cost a third as much.

<edit>Worth noting that I don't do games dev, but I don't see it as being hugely different... just worse hours and pay ;)</edit>

[laggerific]

What's ridiculous is that this is happening while EA feels the need to increase the cost of games. Do you think any of that supposed savings will make it back to the customer....hardly.

And you know of any developer that would do that it would be EA.

[DeadPixel]

I'm working on a game right now and would actually like to know if I could trust outsourcing to do the 2D art for me. I wonder if it would be cheaper than hiring someone local. No programming, just art.

[OrangePulp]

I work for a large IT services company (think "squirrels" =) that has an exponentially increasing offshoring component. Of course, they don't call it offshore outsourcing, they call it "BestShoring". And I have to admit that, as an IT professional (MCP, MCAD, ITIL, et. al.) this is the trend in global economics that frightens me the most and makes me reconsider a career in Forest Services. If there are no restrictions at all in place, why in the world would someone hire a programmer in America for 4x (or more) the cost when they can hire a programmer in India, Vietnam, Brazil, China, or any other second-world country to do the work? All you need is someone in the translation layer to interact with the customer

As for quality, I'll just say this. Yes, at this time, there's a significant disparity in the level of quality, by and large, when comparing domestic programming to offshore (although there are of course exceptions, such as WiPro in India--they do top shelf work all around). But this is just a matter of training and culture. There's nothing genetically special about North Americans; anyone that's willing to learn can be taught to program and program well. It just so happens that the US has had a larger pool of training to draw from than anywhere else in the world up until now.

The end result will be that demand for IT (and many other types of specialty work, such as medical, accounting and legal) performed onshore in the US and Europe will keep slipping downward relative to the second-world countries until economic equalization occurs--that is, lack of demand for labor leads to decreased wages (US & Europe) while increased demand leads to increased cost for labor (India, South America, China, et. al.). For countries that currently enjoy being in the upper half of the economic sphere, this is indeed threatening news. (Especially when competing countries like China refuse to "play fair", via manipulating currency, forced labor, etc.)

Just my paranoid .02...

Unfortunatly, I wouldn't call this paranoia, but rather a realistic outlook on the future. I'm not sure how much of game development can be outsourced, based on some of the reasons already stated, but in general, it seems like more and more white-collar jobs will be going outside the US, and I don't really think there's much we can do about it.