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An Examination of Outsourcing: The Developer Angle

August 7, 2008 Article Start Page 1 of 3 Next

[In the first in a new series, Gamasutra speaks to three major proponents of outsourcing at three different levels -- independent developer, major developer and publisher -- to discover the case for outsourcing and to what extent it should be applied in 2008. In the forthcoming second installment, Gamasutra will examine the issue from the perspective of the outsourcing companies.]

Whether a game developer relies on just a few assets to be created elsewhere or depends on contractors to complete the bulk of its production, outsourcing has become more the rule than the exception compared to just a few years ago.

Indeed, some developers -- like Wideload, Kuju and THQ, interviewed here -- consider outsourcing to be such an integral part of their corporate strategy that they have taken unusual steps to make their companies more than a little dependent on non-employees to help them meet deadlines.

Meanwhile, outsource companies are gladly accepting their roles as specialists who can partner with developers to save them money, increase flexibility in staffing, and create content with specialized skills that are complementary to those of their clients.

However, outsourcing is sometimes controversial in the developer community due to the perception that it might cause job losses in existing Western firms.

But the concept, as explained by proponent and Bungie co-founder Alex Seropian, is that it's the core design and execution that's maintained within the developer itself, and the lower-priority iterative work that is done elsewhere - leading to a different but still valid distributed model.

Indeed, at the Chicago-based developer Wideload Games, the importance of outsourcing rates a "10-plus," according to president Seropian, whose five-year-old company's business strategy was based on the outsourcing concept from day one.

"The fundamental part of our business model is that we have a core staff of full-time employees -- now numbering 25 -- which gets the extra manpower it needs to do all the production work from outside the company," Seropian explains.

"That means outsourcing all the art, animation, sound effects, music, voiceover, and even some of the engineering stuff. On our most recent game, Hail to the Chimp, for example, we had the help of 15, maybe 20 outside companies. Does that strategy work well for us? Phenomenally well!"

Consider the motion graphic interface in Hail To The Chimp that needed to look like a TV news program. The Wideload team believed that was a skill that didn't exist in-house and that it needed to go out and find.

Gamecock/Wideload's Hail to the Chimp 

"We did a bunch of due diligence on motion graphics companies that did work for CNN and 20/20," recalls Seropian. "It just goes to show that some things are better left to outside experts."

Seropian believes that the primary benefit of outsourcing is not necessarily to save money but to best employ company resources in the most efficient manner possible.

"To me it makes no sense at all to try and hire 100 people, which takes a long time," he says. "And it's even harder if you're trying to hire the best of the best, especially here in Chicago which is a great city but isn't exactly the heart of the video games industry."

"So it's a big effort, a big risk, and at the end -- when you've completed production on the game -- you've got 100 people on the payroll and you only have work for five or 10. I'm sorry; that model is broken and it's not one we intend to use."

Article Start Page 1 of 3 Next

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Hogie McMurtrie
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This article is very encouraging, for a concept illustrator such as myself. I was under the impression that most of the pre-viz/concept ill biz was in-house, so even though I have 10 games under my belt, i have not pursued game companies for years...perhaps now, I can find a place as a valuable outsourcing asset for certain companies.

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"Outsourcing is the rule - not the exception"

That's only after the work methods, processes, tools, expectations, prices, etc. have settled and become standardized. The games industry is still very far from that, and every studio works differently, so outsourcing is possible but rare and problematic.

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"possible but rare and problematic"

Then you aren't at the head of the pack, you're living in the stone age. Most (if not all) of the triple A titles released have used outsourcing. This is not an opinion, it is a fact. it makes good business sense and those developers who doubted this are feeling the effects thtough forced layoffs, and in some cases, closure.

We use outsourced art staff. There is no need to have them on board when they are only needed for 30-40% of the development cycle.

Parker Phend
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I would have to agree more with Grassroots and some of what the Anonymous 1 had to say.

That outsourcing will become a very important part of the gaming industry. As with any other industry as it become more and more mature it becomes more practical to outsource certain parts to specialists than to attempt to keep that kind of talent on hand.

But is also important that to make a good game that it is needed to have certain elements through 90% of the development cycle to ensure a good cohesion even if these elements are outsourced. Some of these elements would be a Design Staff, Writers (I believe these to different than Design, I can explain my thoughts on this if someone asks), Testers, and Department leads. These elements are not necessary for every development cycle but all games would benefit from figuring out which staff need to be included.

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Likewise, I don't understand why outsourcing means losing western jobs. Outsourcing doesn't mean off-shoring. In fact, outsourcing generally allows the core team to stay together, rather than lose jobs. Outsource to other US companies and still save and get great quality. Win Win if you ask me.

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"Most (if not all) of the triple A titles released have used outsourcing. This is not an opinion, it is a fact."

We're probably assuming different amounts and significance of outsourcing by these games.

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Its great to see this kind of opening up to outsourcing and yeah its true that more studios are becoming used to the idea of sending part of the project else where. I'm based in Shanghai in an outsourcing studio and its good to see opinions from the developers side as well. What was mentioned about giving the teams all the tools they need is so true, it can help so much more when developers are clear with what they want, saves time, money and frustration. Often its a case of outsourcing being a last minute solution and we have to quickly understand requirements, organize the team and get the work pumping. Although its pretty cool that we can help out in those situations as well.

I'm wondering, for the people here, whats the biggest concern with sending work over to China, for example language barrier, IP protection, quality etc. My apologies for the selfish question but if we understand better we can improve, better games, happier people, love and understanding, world peace etc :)

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It's cheaper, it's more profitable for the owners of development, win-win! Oh yeah until "distributed development" kicks in and the "core team" and heads of the development process get outsourced to a cheaper nation with a lower cost of living. Win-win? For China yes. The industry is booming and yet there are mass layoffs every week. Bye bye Midway, bye bye Lucas Arts, bye bye culture.

There will eventually be a stabilization though. At one point America and other developed nations will have to lower their wages to the point of being competitive with China's. That's where the fun begins. You see, China doesn't follow the WTO's little tiny rules and advice regarding currency exchange rates (FUN!). So while they'll continue to give us a hefty bang for our buck as long as we pay US Dollars to China, the artificially high exchange rate won't translate towards our newly-made, minimum-wage-paid, educated development professionals in the US. So when the remaining artists, programmers, game designers and CEO's in America find themselves doing video games as an expensive hobby with an Indie label attached to it, everyone in China can cheer for the Win-Win. We can't make our clothes, our furniture, or anything else here, what are we supposed to do when we don't even make our ART??? Who's supposed to define our Culture when we've outsourced it and filed for unemployment?

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I think you missed my point. Outsourcing doesn't mean off-shoring. Outsource within your city, state, and country, that's the win win.

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I don't mean to sound combative, but I don't think you read the comment. There won't be Outsourcing within your own city, state, country if the wages aren't competitive. American artists paying 10 times the cost of living can't compete with outsourced artwork from other nations with lower costs that are then compounded by inflated exchange rates.

Why hire Americans from a distance anyways? You have to do all the same extra checks and balances to get results from outsourced workers regardless of location. The real point is saving money, and that money will be saved by handing it over to China and eventually India too.

Art and Design
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For those wanting to "support western development", it is possible to outsource within the US and not utilize any overseas teams. All you have to do is check out our website and ask to work solely with our San Francisco based team when you call. All pitch work, concept art, marketing materials, rigging, animation, and even 3d can be done here, in house. We have 3d and production 2d operations in Asia working on the biggest games out there as well, so if you want the considerable cost savings and AAA quality by using our groups there, that is also an option. It is up to the client every time. Some don't want the work being sent to China. Some want it all done here. The costs, of doing so are obviously higher than balancing production with our Asian teams. It is up to you.

Those wondering, should be aware that outsourcing to affordable development areas allows the western based groups to afford to stay in business. If we did not have our Asian in-house teams we would not be able to compete in as many areas as we do. However, there are more people working for us in the US than we had company wide in 2004.

The reality is that games development is up ten times from where it was in cost back in ps1 days. The prices for those games are not ten times the something has to give. This industry has to be able to stay healthy for it to survive the rough economy and production cost problems it faces. Fortunately outsourcing is saving up to 40 percent off the costs of working with the old model of large dev teams with in-house work on everything. That model led to crunch/non-crunch and is very expensive. Outsourcing is one of the things keeping this industry healthy.

We work with 18 of the top 20 publishers and have completed 185 projects for 155 clients, including the pitch work for Mr. Seropian here that he used for his Stubbs title.

Outsourcing works. Nearly every major AAA title in the industry is being outsourced. I completely agree with the person who pointed this out.

There are only a handful of Outsourcing studios doing great work so compare portfolios and get references before making any decisions.

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Hilarious. Let me quote this "This industry has to be able to stay healthy for it to survive the rough economy and production cost problems it faces. Fortunately outsourcing is saving up to 40 percent off the costs of working with the old model of large dev teams with in-house work on everything."

Ok, so let me get this straight. The economy is rough so hire people in other countries. Wait what???

This sort of greedy short-term thinking makes great sense for money-handlers with no ability to participate or create games directly. Sadly (or not), the local US money-handlers such as these outsource firms won't be around for long. Is anyone paying attention at all? What's the point in having 70% of production moved to China when you can simply move 100% there? Or better yet, just replace 100% of your US production with someone else's 100% Chinese production? If it's cheaper - why not? If loyalty or patriotism or even cultural interest isn't an issue - why not go all out? Why should I call up a San Francisco outsourcing firm when I can call the Chinese one that has cheaper receptionists and cheaper HR people? If saving money and staying in business is your GOAL in making games, get ready to stop making them, because your future is near its end.

As for AAA quality, that's the most bloated and over-used term in this industry. Go to a local Gamestop and pick out all the AAA quality games on the shelves, if you end up with more than 5 in-hand that were made in the last 6 months, you have failed and are now in possession of 4 awful games more than you should.

The only positive spin on outsourcing or the game industry in general is internet-based distribution of independently developed games. This could eventually bypass the useless and ineffective publishers that are currently thwarting the game industry from even recapturing the standards it had attained in the early 90's. As long as publisher money dictates what developers make, they'll continue making shovelware with outsourcing then slapping "AAA" on it as if that makes it all better. How many AAA outsourced MMO's are or were in production in the last 2 years, and how many have been canceled? Lower costs, lower quality, more layoffs. Thanks outsourcing, thanks publishers.

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click Manley's username. You probably should have checked the link before saying all that. from what I understand, outsourcing studios are basically game developers who specialize in different areas of production, like art or sound or QA or whatever. i know the film industry works that way and uses many studios to make a movie. they are not building giant teams and then keeping everyone on while they wait for the next project to get moving full steam. Seropian seems to have learned from that. that way seems to be the core teamss control project vision and all production gets farmed to appropriate teams around the world, eliminating overhead and profit loss. How is that not smart?

Art and Design
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To answer your question, yes the film industry does everything it can to cut costs. Lucas has his group in Singapore being trained on the new Clone Wars project (which is being entirely set up to become their offshoring location in the future). Much of the Hellboy 2 vfx was done in Budapest and not in SF or LA which helps save costs...Sony has their film vfx group in India. Rhythm and Hues has their vfx group in India etc...etc....Both the television industry and film have been working overseas for decades.

Regarding the other comments, check out the news story on gamasutra today where the Sony exec explains that only 3 out of 10 games recoup their costs. The old development model is partially to blame for this and outsourcing will go a long way to help solve that problem.

Our company will never move all of it's work offshore. Our concept art and animation teams cannot be matched in western cultural awareness by any groups overseas. That kind of work, where new universes are being designed for US and world markets takes a very specific background. However, it goes the other way too as our Chinese studio patiently builds a world for the Asian market, which is actually seeing a ton of that content getting outsourced back to the US teams who follow their lead. It goes both ways. We have to put the best people on the tasks no matter where they live. Being smart about where we grow enables us to do things we could not do well if we were not in the locations we are in.

Anyway, this has been an interesting discussion. Hopefully people will look at the quality of work being done and judge groups by that, instead of race. All that we care about is whether the work is excellentt. If it was not, being in Asia would be pointless, regardless of cost savings. The whole point is to increase quality and decrease costs. There are ways of doing this and I think our work speaks for itself.


Jason Manley

Ken Nakai
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I realize I'm coming in late to this conversation but just wanted to point out something. Outsourcing, like every other tool available to a business, is an option that exists but isn't the solution to everything. I've heard of businesses (non-game-related) that fly in the face of outsourcing and do just fine. I hear of others using it to their advantage. Similar to what others mentioned, the key concept here is where you outsource.

Like Grassroots mentioned, you wouldn't hire a doctor on staff to cover the possibility you might need someone when you get sick. All too often, businesses think that outsourcing means you take an entire department and ship it off to another city or country. What isn't taken into account is that outsourcing agency often works in a different way and has a different motivation (money) than your in-house employees (money + the work + the success of the company).

Successful outsourcing will depend on research and on determining where your strengths are and the strengths of the outsourcing agency are. Can an Indian company handle customer service for you? Sure, why not? Can they handle software engineering? Sure but you have to remember a few things that will reduce the cost-savings: time difference (where you lose a day if they misunderstood your instructions, which happens a lot), liason requirements (you still need to dedicate staff to liase with that company to make sure they get everything they need), cost differences (sure they're cheaper but they're also charging by the hour), and cultural differences (for example, Indians and Chinese cultures favor group thinking and downplay individualism often).

Can you outsource in the US? Of course. The cost of living in some cities is substantially lower than it is in others. I live in Los Angeles. House prices are ridiculous compared to those in Oregon or North Carolina but can I find firms there to do work for less money than I could here? Sure. Why not?

Ultimately, the decision to outsource should be addressed like any other major business decision and not seen as a quick fix for a downturn. More often than not, companies that succeed during and after a downturn are those that spent less time cutting costs and more time innovating. China has cheaper labor, but the US has traditionally had better innovation (this is changing though). Often, you can look at process and find ways to improve it (thus increasing efficiency and/or reducing costs).

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I'd like to add a few things:

1- Indians, Chinese or Ukrainians have as much a right to earn a living and make games as Western Europeans and Americans. So on comments like "What's the point in having 70% of production moved to China when you can simply move 100% there? ", I'd reply "why not indeed?" Because it's not that simple. Projects tend to be only 70% (often less) outsourced offshore because in many cases design has to be kept in the West if the West is the market the game is aiming at. If your creative team in SF cannot put together a better design than a Chinese team, then I say you have a problem with your team, not with outsourcing whether it's inshore or offshore.

2 - Many projects wouldn't get greenlit at all if it weren't for offshore outsourcing. It's been a reality in IT and many other industries for years. They simply would not be cost effective, and the whole team would get laid off.

3 - The games industry is miles away from being in the situation where outsourcing creates unemployment. I don't know of many reasonably experienced or talented artists/programmers/producers who, being laid off, would not find a new job within a matter of weeks. The same applies to programmers in the IT industry. I hear voices asking, "what about juniors, young graduates willing to break in the games industry? ". Now that is indeed an issue, but the solution lies in better education and training, not in dissing at outsourcing. In fact I know several young & talented junior artists in Western studios who quickly made it up to lead positions thanks to outsourcing.

Sergey Lobko-Lobanovsky
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So far it seems that most debate is about some miraculous unemployment problems because of outsourcing. As correctly mentioned above, outsourcing is about saving costs to increase capabilities.

However, it is even more than that. Games comprise Game Play, Content, and Technology. Outsourcing should be employed for non-core activities of a business. Game play is a core business activity and shouldn't be outsourced. Content as a business process is already being outsourced. Technology comes next.

One may say that Technology in our industry is somewhat outsourced to middleware providers. However, when did you last talk to a middleware vendor that was willing to adapt their engine to your specific needs? For 99% of them it is "buy the source code and do it yourself". Then your team has to buy it, study it, work thru issues, talk to the support, etc, etc. Sounds like fun? For programmers - yes, but for the stakeholders (execs, investors, etc) -- hardly so. Why not employ a provider that is either already acquainted with the middleware you've chosen, or let them suggest middleware, or even use their own engine/tools?

For your game Technology is secondary to the extent that all it has to do is provide the desired quality according to your budget. And a capable outsourcer can become your technology partner.

Also, gamedev is a young industry when it comes down to the outsourcing service level agreements. Are there many vendors that can commit to an SLA?

@ Bitfold we consult our customers on the best practices -- when, where, why and how to employ outsourcing, and keep our hands on the relationship's pulse. Nurturing the relationship, solving customers' business needs, providing our hand where it is needed, suggesting things from our cumulative experience -- that's where the power of outsourcing is and that's why it is a partnership and more than work-for-hire.