Video games are predicted to hit $42 billion in revenue by 2010, and game outsourcing will be a significant part of that. Video games veteran Shiraz Akmal notes, "One study actually says that game outsourcing will hit $1.1 billion dollars in terms of revenue by the end of this year, and $2.5 billion by the end of the decade".
But cheap overseas labor isn't as effective as a means of cost savings as some game developers may hope, according to an outsourcing study by consultancy firm Beriah.
This article is worth only half of the resulting comments. Jason Manley of Massive Black notes,
"The hourly or daily rate in outsourcing is not what studios should look at when doing this. They should be looking at total production cost including internal management hours, feedback loop quantity, production time and the like, on each asset. Some outsourcing studios will quote 20 bucks an hour but after your own managers pull their hair out with extended hours and a dozen feedback loops per asset, you end up paying more. It comes down to the total cost per asset, internal and external as well as overall quality grade."My own experience suggests this is accurate. The cost formula I use is:
Admin cost /100 MD + Management cost/10 MD
Administrative cost: This includes the expense of identifying suitable outsourcing partners, Negotiating bids, and expediting business transactions. This cost will demand the part time attention of the General Manager, the Financial Manager and you Outsourcing Manager. The initial cost of identifying your outsourcing partner will likely include travel to meet the key personnel and familiarize the outsourcing vendor with your project. After the initial expense, estimate 1 internal man-day/ 100 man-days outsourced per individual involved. (e.g. 1 MD each for the GM, FM and OM).
Management cost: This includes tracking outgoing and incoming assets, inspecting work, generating feedback for corrections, and integrating final assets back into your pipeline. This job demands 1 manager-day per 10 man-days outsourced. In other words, if they've got a team of 30 artists working on your assets, you need at least 3 internal personnel to oversee their work. This cost will also demand the part time attention of your art director and your art lead during the inspection process. After the initial expense, estimate 1 internal man-day/ 10 man-days outsourced per manager involved.
Administrative cost: This includes the expense of identifying suitable outsourcing partners, Negotiating bids, and expediting business transactions. This cost will demand the part time attention of the General Manager, the Financial Manager and you Outsourcing Manager. The initial cost of identifying your outsourcing partner will likely include travel to meet the key personnel and familiarize the outsourcing vendor with your project. After the initial expense, estimate 1 internal man-day/ 100 man-days outsourced per individual involved. (e.g. 1 MD each for the GM, FM and OM).
Management cost: This includes tracking outgoing and incoming assets, inspecting work, generating feedback for corrections, and integrating final assets back into your pipeline. This job demands 1 manager-day per 10 man-days outsourced. In other words, if they've got a team of 30 artists working on your assets, you need at least 3 internal personnel to oversee their work. This cost will also demand the part time attention of your art director and your art lead during the inspection process. After the initial expense, estimate 1 internal man-day/ 10 man-days outsourced per manager involved.
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