One publisher/developer that seems to be one of the highest-profile proponents of outsourcing is THQ which, in March of 2006, launched its so-called XDG unit -- which stands for "External Development Group" -- to better manage its outsourcing efforts, which are much more extreme and focused on reducing cost on a global scale.
At the time, Shiraz Akmal, then VP of operations and product development, explained that XDG started as "sort of a business development group that keeps an eye on product development and the requirements of our games. We do all sorts of due diligence, and we basically save our studios the time and hassle of determining where the work should go. We make sure that the outsourcers actually exist, that they have the resources and the quality they claim to have, and that they are financially stable."
He predicted that THQ would be expanding its outsourcing efforts from then 20% to maybe 40% or perhaps 50% "in the next few years."
Flash forward almost two and a half years to today... and outsourcing has become such a mainstay of game production at THQ that the company is about to announce the opening of a new office in Shanghai, China "from which THQ will spearhead the expansion of local partnerships to develop and publish both online and console games," according to Kevin Chu, now corporate director of XDG.
He will be moving his office to Shanghai to head up global XDG operations from its base there. "I believe that shows how big a commitment the company has to how well our process is working," he says.
First out of the gate will be a free-to-play, micro-transaction game called Company of Heroes Online, designed specifically for Asia, in collaboration with THQ's Chinese operating partner, Shanda Interactive Entertainment, Ltd.
THQ/Shanda Interactive Entertainment's Company of Heroes Online
In fact, THQ has transitioned from outsourcing to what Chu calls "distributed development," a process in which outsourcers function as an extension of the developer's internal team rather than merely an external producer of piecework.
"We're talking about their contributing to pre-conceptualization, pre-production, prototyping... everything we do here back in the main studio," Chu explains.
The goal, he says, is to go far beyond traditional outsourcing that might sustain just 20-30% growth. "If you really want to get up anywhere higher than that -- perhaps to 50% or even 60% -- you can only do it with changing the way you think about making games, by achieving a level of integration with vendors that I think not a lot of developers are willing to invest the time and training to do."
"But, through distributed development, we have outsourced up to 40% of the assets and we hope to reach 60% in the upcoming year, perhaps with a game called Darksiders: Wrath of War" -- which is an action/adventure RPG scheduled for release on the Xbox 360 and PS3 this January.
THQ's Vigil Games studio has had artists working with their "partner vendors" for over a year now, says Chu, and almost all the concept art for Darksiders was pre-visualized at their studios overseas.
Showing the extent to which the company believes in a much more global, highly distributed environment, Chu concludes: "XDG has been working very closely with them, trying to train and improve their staff so that they become more experienced with the style of game and more proactive as far as interacting with the THQ team, which is the first stage of a true distributed development environment."