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Why Developers Outsource: The Less Obvious Advantages of External Production
by Anton Wiegert on 07/26/14 08:12:00 am   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

From my experience of external development over the last decade, I believe one of the most important questions being asked, or thought, is: “Why are we outsourcing?” Artists inside game studios are particularly interested in why.

Since outsourcing simply means to “subcontract a business process to a third party,” it’s a practice that can easily go wrong because the work being done externally must match internal standards and fit into the big picture. However, while the potential downsides are often clear - both immediate and visual (such as low-quality art assets) - the many advantages of outsourcing are less obvious. They’re less obvious in particular to developers outside the production and management field, such as internal artists, but the advantages of outsourcing far outweigh the disadvantages. This is why it has seen steady growth, why it’s here to stay, and why it will only keep expanding.

However, if you don’t work in a position that requires a broad perspective or long-term view of projects, it’s natural to overlook the enormous size, importance, and beauty of the forest because of the occasional rotten trees falling in your way.

Hence, I’ve put this article together for anyone who has ever thought about asking “why are we outsourcing” but never did - or asked without receiving a very deep or satisfying answer. Admittedly, even some outsourcing managers would say that you only outsource "to save money," but that's not completely accurate: At best that’s only one of many reasons, but I'd argue that no one really “saves” money by outsourcing because the money from “costs avoided” is regularly spent on more game content or other things within the studio (including annual raises and bonuses) rather than being kept around and not utilized, which is really what “to save money” means.

Nevertheless, it’s crucial to understand that even if outsourcing was not beneficial from a financial point of view, there is in fact a very long list of additional advantages that still make it a desirable practice, so discussions that solely revolve around money tend to be misleading. If you’re wondering what those other advantages are, then this article is for you!

While a wide variety of work is being outsourced by game developers these days, I'll focus on art assets; these assets are the most common content to be shifted externally and hence what is most familiar to the biggest audience. However, the concept and principles I address apply across other departments and other types of work. I will also avoid the typical esoteric business answers, such as “outsourcing will release capital for other investments” and how it “converts fixed costs into variable costs.” While both statements are true, such explanations are too abstract for most of us and will just lead to further questions as they leave too much to the imagination.

Money

Obviously, the primary reason for outsourcing by Western game developers is the availability of cheaper labor in other parts of the world, such as China. Let’s get that out of the way. How big the difference in wages is depends on which regions you compare, which vendors you work with, and how well you’ve negotiated your service agreements, but, in general, cheaper labor makes for lower costs on an ongoing basis while content is created. This should not be news to anyone, so let’s move on to the less obvious benefits.

While it’s easy to see money being spent on outsourcing during a game’s production, you don’t see the money NOT being spent thanks to it, for example, when your studio no longer needs content created. Unlike internal full-time employees who must be paid all the time, regardless of whether your project is in pre-production or has just shipped. By outsourcing, the periods without the need for content production won’t cost your company the salaries of professionals who are waiting for the next project to go into production.

On the other hand, if you have a larger team internally and lay off employees between projects, you waste more resources having to bring these employees, or their replacements, back into the workforce when the next project is ready. Besides the tremendous stress this causes and the unlikelihood that the best employees are interested in or available to return, this practice is even more problematic.

Hiring new staff internally for short-term projects can be very expensive, directly and indirectly, due to the costs of onboarding and training. No one is very productive as an employee for the first 1-3 months on the job, and we often require assistance (and thus time) from our colleagues to get up to speed with new technology and pipelines, for example. Through outsourcing, this cost can be absorbed externally, which would be beneficial. First, you probably won’t notice it and can get on with your work without having to onboard anyone, and second, it’s less expensive if this period of lower productivity is being paid for in China versus California.

Time

Time may be money, but by itself it’s also the most limited resource we have. You can rarely get more of it, so even if you have the budget and patience for time-consuming processes, you’re better off not to get involved with them internally.

If you’re a smaller developer, outsourcing can also allow you to go into production without any R&D of your own how to build assets most effectively. Granted, you cannot make cutting-edge content this way, but most studios aren’t trying to; nor do they really need to in order to ship entertaining and successful games.

Regardless of your own studio size, subcontracting allows you to assemble a large team of artists relatively quickly and thus gives you a head start, basically extending your production period in comparison to staffing up an equally large team inhouse. You could take advantage of this extra time that subcontracting provides to either make more content or get content back faster so you can polish and/or use it better in-game.

The time spent recruiting, screening, interviewing, onboarding, training, and bringing internal employees up to speed can be immense, especially if you need 25-100 extra artists. This is not just a problem about money or the production delay staffing up internally would cause, but also about the burden it would impose on support functions inside studios.

Overhead

Besides avoiding the burden of hiring lots of employees really quickly and then laying them off once production is complete - only to repeat the same procedure for each project - the use of outsourcing also lowers the burden on support functions once everyone and everything is set up. Otherwise, your HR team would have to deal with many more employees, and so would your IT team. You think it’s hard getting one more monitor or another software license right now? Imagine asking for the same after doubling or tripling your team size!

The cost of buying all the software licenses and hardware (e.g., Wacom tablets, PCs, monitors, high-end graphics cards) could easily land between $5,000 and $10,000 US per additional artist. Just multiply that by 25 or 100 artists and you get an idea of what a larger team would need (not to mention the time it would take for your IT team to install and set everything up, the extra rent for a bigger office space to fit everything, and a more expensive company insurance plan to cover everything in case of theft or other cause for claim).

Since the service providers are responsible for managing their own workforce, you don’t have to deal with management or HR issues involving individual employees. This also means that the number of middle managers inhouse can be kept to a minimum, thus keeping your organization lean and less bureaucratic.

Flexibility

Game development has cyclical demands of developers, especially content creators, and outsourcing allows for temporarily adding more resources when they are needed and releasing them when they aren’t, without hassle or hard feelings. The truth is that temporary employees don’t always live up to expectations, and may be difficult to replace emotionally, financially, or practically. However, if you run into the same issue within an external team, your service provider, which usually works for multiple clients, is in a better position to find a more suitable project for those who cannot keep up instead of having to let them go.

Whenever you’re subcontracting work, you are dealing with service providers whose very business and livelihood is to provide services to their clients (e.g., to create art assets for game developers), so whether or not tasks are fun, interesting, or creatively challenging is not part of the equation when the work is done externally: Service providers don’t refuse to work on something because they feel the task is beneath them or would be boring; hence internal art managers can worry less about who should work on what because artists A and B don’t like to do X or Y type of work and would become grumpy, depressed, or lower morale if forced to do it.

This also means that the more mundane or repetitive tasks necessary to ship all games can easily be shifted externally so that your internal team not only works on more interesting tasks, but also works on tasks that are much more important to the game.

Thus, internal employees can be utilized more efficiently: They can be more agile and work on tasks that require quicker turnarounds, need more in-game iterations, or appear out of nowhere, such as great ideas that come up after plans and schedules are officially completed.

Value

The same goes for tasks that are very time-consuming. It is much better to offload these tasks externally than to lock down someone internally for a very long time. Extremely large or complex art assets can be completed much more quickly, and thus can be back in the game faster, by temporarily assigning multiple artists to the same asset. In general, more assets can be produced in parallel, which could shorten the critical path - making it easier to meet deadlines and milestones. This would be very difficult to do inhouse as it requires splitting work up and distributing it among multiple artists.

It’s much better to have internal employees focus on R&D and other tasks that cannot be outsourced easily. After all, the biggest advantage an internal staff has is its proximity to the game, with instant and firsthand access to the game engine and designers etc. Internal staff members will always have the ability to make better decisions simply because they are in the loop and better informed about the project’s intentions, context, and recent developments.

It would be a shame to not take advantage of this fact and have the internal team work on tasks that could be shifted externally while work that simply must be done inhouse is overlooked, neglected, or postponed.

Capacity

As outsourcing is all about utilizing extra people outside your own walls, your team size won’t be limited by the physical size of your studio or the number of managers and support staff you have.

You can in fact make very large games while still staying small. This includes being able to keep your studio so small that you actually know everyone's name, you don’t see new faces every day, and your company culture is more personal and less “corporate.”

It also makes it easier to keep within your headcount limit if your studio has one. Thus, very special or obscure positions could be filled internally (e.g., a proper economist for your MMO game) even if you normally wouldn’t expect to find those positions in a game studio. You can also choose to fill more positions that affect the gameplay directly (i.e., gameplay programmers and level designers) instead of content creators if you think that would increase your chances of creating a good game.

Stability

Periods of high employee turnover add inconsistency, uncertainty, and even fear inside game studios. Hence, the right use of outsourcing provides a level of continuity and stability to your company, as you won’t see a surge of colleagues join and leave as projects go in and out of production or as staffing needs suddenly arise or disappear due to milestones being met or priorities changing.

Keeping teams more stable is also important to maintain productivity at even levels, as the social team dynamics tend to change whenever new members join a group. Usually, every time the composition of a group changes significantly, it’s normal and human to slip back into a friendly phase of “getting to know each other,” with responsibilities being vague and conflicts intentionally avoided at the cost of productivity and progress.

Speaking of productivity… Subcontracting also enables production to continue while everyone inhouse is away on holidays and vacations, even during weekends if necessary. This occurs regularly, but for obvious reasons it’s out of sight and thus something which few internal employees are even aware of.

Expertise

Companies that specialize in creating art content usually have access to a significantly larger talent pool of artists due to the nature and focus of their business. In addition, because service providers can be found all over the world, they also bridge cultural gaps and language barriers, giving developers access to amazing talents with whom they could not communicate directly. This is a huge advantage compared to trying to recruit and relocate talent locally.

Through the use of outsourcing, you can also gain access to the world’s best freelancers, who may not be interested in relocating or cannot relocate due to issues beyond their control, such as inability to obtain a work visa or because their family has jobs or attends school.

Being able to involve industry leading specialists, such as high-end freelancers - despite not having them onsite - can also reduce the time and cost needed for internal R&D because your internal team can acquire new skills and best practices quickly by seeing these experts work (albeit remotely).

Competitiveness

Overall, outsourcing enables developers to stay more competitive in a multitude of ways, including as employers: As it enables production to continue while everyone inhouse is away, the need for overtime and crunch can be significantly reduced internally, making the work environment more attractive and allowing for greater work-life balance. It also makes it possible to offer better compensation for the staff you do hire internally because you can consider your headcount more carefully and limit hires to fewer new positions, but for the same budget, if you wish.

Outsourcing ancillary development processes gives you more time to strengthen the processes that are at the core of what you do; in the art department, for example, this means using content rather than making it (e.g., placing props, not building them). In essence, you can make the game, not the content for the game. Theoretically, this will lead to better games that are more competitive as products, as long as everyone has been hired with that goal in mind.

If specialists are creating your content, you will get better props, characters, and weapons than if one type of artist does them all. Generalists will never be able to beat specialists when it comes to speed, quality, and ingenuity (and if they seem to, then you’re not working with real specialists or you’re getting in their way somehow).

Finally, leveraging external resources allows your project to change direction drastically half-way through without jeopardizing the entire studio, for example, if there’s a significant change in art direction or even game direction. While rare, such extreme changes could otherwise be devastating - if you’ve recruited and staffed up an internal content creation team for one type of game that you’re no longer meant to produce.

I could keep going, but I think I've made my point. In game development, few things are as simple as they seem. And life is full of paradoxes; a lot in the world is in fact the opposite of what it first appears.

So, while outsourcing may seem like a threat at first glance (in particular, the risk of jobs being lost), in reality it provides the complete opposite: It actually helps secure jobs internally - across all departments - by reducing a lot of risks. Without outsourcing, games would be more expensive in the shops or they would have to be shorter, have less variety, or offer lower quality graphics. As a result, fewer games would be made, as AAA developers would have even more trouble (than many already have) staying profitable and thus remaining in business.

This is why developers outsource and why I love being responsible for it - regardless of the occasional hiccups, the common misunderstandings, and the added layer of complexity.


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Comments


Madina Chionidi
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Excellent article..

Most of the people see outsourcing as a way of saving money by using cheap labour, which of course one of the main reasons why it has become so popular.

As it was described above there are many more advantages than just saving money. For instance; outsourcing repetitive and tedious work while artists in-house can concentrate on learning new tools, techniques and establishing visual targets, while at the same time keeping an eye on the quality.

However, artists do not usually ponder on the managerial side of things. One could argue that they have a point for complaining about the lack of stimulation that over-outsourcing brings to them. A rusty in-house artist will eventually get less efficient in producing amazing benchmark assets and therefore the need for a “world’s best freelancers” class is created. Furthermore, outsourcing gradually establishes a hierarchal ladder among artists with some on the top and others striving there while going through a “moral lowering in-house” phase. What is concerning is to me is the potential tendency from artists in the future to consider the in-house job as some type of necessary evil on the way to something “bigger”. It is of my personal opinion that a flatter model is always more appealing to artists and seems to work well, too.

But then again, one cannot keep the innovation game up without a little competition, even when we are talking about art. It is a responsibility of the outsourcing manager to be able to avoid estrangement of talent from their own studios and it seems that balancing out the amount of work that goes out while being clear with the in-house talent about the reasons of this necessity is the key to avoid the aforementioned.

James Morgan
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I found this to be a well laid out and thought provoking article. As someone who makes my living working as a contractor to others, it's good to see someone posting more logic behind outsourcing than just "saves money". Thank you for taking the time to write and post this.

Tim Badylak
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This is great stuff! By understanding and embracing external development, as more than a way to "save money", makes your internal team modern and flexible. I believe this is a key component for a successful development team. Any team or discipline would benefit from this article.

Thanks for writing this up!

Arjun Agnihotri
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Ditto. Good article, Anton! Outsourcing also gives you the opportunity to collaborate on pipelines to make them even more efficient, as well as innovate on processes and tools. An evolved partner should be able to augment here should the developer be open to it. The potential to "co-improve "and co-create" is potentially limitless with tangible benefits to the businesses.

Gareth Edwards
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Correct. It's particularly important to embrace the concept of 'specialization', rather than think of it as just outsourcing in the sense of cheap work. Car manufacturers don't try to make their own tyres - it would be stupid - impossible for them to be as efficient as a focused tyre manufacturer. Likewise we (Cubic Motion) pretty much have to laugh when a developer thinks they can somehow be more efficient at facial animation for any given quality level. It's ridiculous, regardless of what 'magic' software they've sourced. You can't beat a large specialized team who do absolutely nothing else, day in, day out. Still, the industry is making progress. See also: http://www.cubicmotion.com/specialization-works-and-keeps-you-wor
king/

Kevin Fishburne
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Something else to keep in mind are the labor conditions and general freedoms protected by the governments of the outsourced employees. Would be a shame to have "blood games". Otherwise, outsourcing is just the slow, inexorable equalization of the global economy. Soon China will be outsourcing select employees to the U.S., and vice-versa; global cooperation, as with the Linux kernel. Hopefully services like Google Hangouts will make the transition more personable.

Jay N
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Thank you for an interesting read. While it's nice to see someone taking a bird's eye-view of a field, even if it's their business, I would have appreciated an analysis of the potential negative consequences of outsourcing as well, such as the quality of the work you receive vs. the amount of in-house overhead required to manage off-site resources.

The first company I worked in which outsourced art asset creation to a team in China resulted in us ending up with almost exclusively poor quality assets in return, and so a lot of the work had to be redone time and again. Unfortunately, the only thing management cared about was the money they'd saved on not having the work be done in-house.

The overhead of managing an off-site team also meant we'd have frequent pipeline problems or delays, which would have been less of a problem in-house. In the end, one of the managers from our company had to go to the site in China in order to establish proper communication channels, and while this did help somewhat, it was at least a year overdue.

Naturally, this is just one example of outsourcing going wrong, and purchasing outsourced materials from already established companies may be a lot smoother nowadays, but unfortunately, there's no way of knowing the quality of what you get until you get it. Last year I was project manager for a development project where our development partner decided to outsource coding to a new sub-contractor on another continent. Since there was nothing in the contract specifying local development, we could do nothing as the sub-contractor had grossly underestimated their delivery capacity, which resulted in delays of over a year and a significantly reduced scope.

If a new game developer starts up and outsources from the get-go, that's one thing, but if a developer downsizes its entire art department (or whatever department) in order to outsource, what message does that send to the rest of its employees? And it's also worth considering the broader ramifications of mass-scale outsourcing, like how local artists will have a much harder time getting into the industry if outsourcing becomes the norm. But they can always try competing on quality or specialization rather than price, I suppose.

Alexandre Lautie
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If you want to do high quality, outsourcing is never cheap. It's more expensif than doing it internaly.
You can only consider it less expensif if need this person for a short amount of time, or if the task is really low complexity.
A good prog or a good artist is always very expensif (include best chineese artist or coder).
Hiering someone is most of the time cheaper for the same quality. But you need to give him a constant flow of work. That's when outsourcing is great (with all the thing you've already talk about).

Eric Schwarz
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I'll also add: location. I work for a company which has a fair number of people (myself included) who do not work or live locally. The Internet is a magical thing indeed!

Peter Kojesta
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I've run an outsource company, Exis Interactive, for the last 12 years; And this article provides a lot of the reasons why we're able to work on AAA games like Civ/Xcom. However, I think there's a few points I'd like to address that may provide some more insight.

Money:
Framing it as a China/India vs California argument is simplistic. Our team has redone so much near/far east outsource work that it borders on absurd. Internal artists from every company we've worked with are always upset at the work they get from overseas and the vast amount of time they have to spend to fix it. I think the USA/Europe still hold massive competitive advantages in terms of quality and capability. Considering half of my family is Indian, that's saying a lot! I often view going to the far east for outsource as a blind money driven mentality. While it's certainly possible to find quality Chinese/Indian outsource, my experience and that of all of my clients is typically that paying more for western outsource developers saves money in terms of rework prevention.

There is also the fact that the language issues/time difference typically make working with far east companies much more difficult. Change orders don't get implemented for days, and things are often misunderstood. Ie, the infamous "purple pizza" issue with the Simpsons coloring contract send overseas...

Quality:
Getting the most out of outsource falls squarely on the studio hiring the outsource team. The best thing a studio an do is have an outsource manager who provides quick and complete feedback on the assets. Bad outsource managers often s treat outsource as an extension of an internal art team, and this is inappropriate. Nitpicking, endless rounds of tiny changes the player will never see, slow feedback, passing outsource art around to an entire team to collect 1000 bits of crit.. this only makes for poor, slow, outsource.

Anyone who looks hard enough at a piece of art will have some bit of crit they want to add, especially when people just "have to get their 2 cents in" to justify their job. Good outsource managers weigh this against the actual needs of a project, and provide the above mentioned feedback in a concise manner.

lastly, though you mentioned expertise, I think it warrants mentioning again; outsource artists are spending every day working on art, with varied engines, in different styles, with new and varied technologies. The quality provided by an experienced outsource team can often really make the difference.

Thanks for the article, it's a really nice look at why outsource plays such a critical part in the industry.

Curtiss Murphy
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Strong article, thanks for taking the time to share your thoughts.

John Maurer
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What I heard was, American game industry workers want more money, and publishers answered that demand with foreign workers, who will also eventually ask for more money. Look at China:

http://leedsonfinance.com/2013/02/24/the-end-of-cheap-chinese-lab
or/

India's still playing the cheap labor game, and they've been cranking out skilled laborer's for years, which is why you have Indian computer scientists helping you over the phone.

Will be interesting to see how long these same individuals go along with taking sub-standard pay after they begin actually using their education and finally gain the experience they needed to shake hands with that degree.

Eric Robertson
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Great article.

I am also a fan of outsourcing for the items mentioned above and the extra bonus of learning about folks from other countries. I firmly believe there is a creative value add incorporating folks that live elsewhere.

As others have mentioned, keep it simple and be flexible on what is created, and outsourcing is a good fit.

Eric Byron
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I agree this is an excellent article. I've been on both sides of the outsourcing equation. I outsourced art on AAA games for about 3 years, then crossed over to outsourcing engineering and now I work for a vendor that offers engineering resources in China. Yes, there are many benefits to outsourcing beyond saving money.

I'm also a realist and will be honest in saying that successful outsourcing isn't easy. It takes considerable effort on both sides to make the processes efficient and you have to have the right external partner that you work well with and develop a good relationship over time. Start small, workout the processes, communications and expectations so that you have a solid foundation to build on.

Dave Hoskins
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I've always thought that Unity's asset store was a great form of outsourcing, with it's peer reviewed and instantly accessible goodies. There's a lot of chaff amongst the wheat though, but it can save an enormous amount of resources.


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