Workshop Info

W9 - Tap the global market to tame costs and amass talent Tuesday, May 17, 1:00 PM - 3:00 PM | Room 408B

As publishers and development studios react to higher production costs, more and more off-site talent is sought to contribute to the game creation process. A network of Chinese, Indian, and boutique operations in North America and Europe already exist to lend support to mid- and large-sized projects. But an outsourcing solution isn't just for large publishers. Small and mid-sized operations can also tap off-site talent to speed production and reduce costs. This session will expose the benefits and risks associated with outsourcing sensitive components of your game: how to locate talent, how to communicate with them, what are the typical terms, and how do you protect your IP?

Moderator:

Jason Robar, Founder - AisA Group

Panelists:

Xin Chung, CEO - Vykarian

Serge Orlovsky, President - Nival Interactive ** was unable to make the panel **

Dan Bernstein, CEO – Sandlot Games

Rajesh Rao, Chief Executive Officer - Dhruva Interactive (Bangalore)

Emilie 'Tobi' Saulnier, Former Vice President of Product Development - Vicarious Visions, Inc.

Richard Vogel, Former Vice President of Product Development - Sony Online Entertainment

Synopsis by Topic

The Industry's Attitude on Outsourcing

Though other industries have been using outsourcing as a business model strategy for some time, the gaming industry – as a whole – is still in the early adoption phases. Though there are some companies who have been taking advantage of the benefits of this process for many years, most game developers and publishers are still unfamiliar with the outsourcing process and in need of experience and guidance. With the blossoming demands (and budgets) of Next-Gen titles, publishers and developers alike are looking outward for help with saleability and cost management.

The Truth About Cost

+ Average base rate for salary overseas is $1000/man-month (ranges from 500-2500+).

+ Outsourcing partner salary overhead, profitability margin = ~33%.

+ You increased management costs (including travel, additional personnel, communication, etc.) = ~33%

= Actual projected savings of (only) 20-33%

Your producer or director-in-charge of the communication and management of the outsourcing partner will be tasked an additional 33% of their usual workload. - Richard Vogel

Outsourcing initiated simply to find cheap labor, or to help your bottom line is not typically the best thing to do. - Xin Chung

Do not use outsourcing as a 'band-aid' – Rajesh Rao

Finding Talent

Q) Where do you go to find outsource providers? When you are a small developer, and you don't have the cash reserves to assess, travel, and handle due diligence on companies yourself, where do you go for those answers?

(Hopefully, if you are reading this document you have a good idea concerning this question – OutsourceReport.com. ;), But the board did not have a convincing answer for this question, as no other extensive resource exists but what OR plans to be.)

A) Gamasutra listings, search the Internet, use outsource bidding sites, International Game Developers Association, and consultants.

Finding an outsourcing partner is not an easy task – especially finding one that seems to have the capabilities to handle your needs, the availability to handle the workload, and proven stability and security in the industry and their own economy. When assessing companies to work with, some helpful practices were suggested:

• It's all about relationships. Look beyond the bottom line to try and nurture long-term partnerships.

• Due diligence is a must. You have to visit their studio, their management, their talent. Before and during the production process (at least once a month). Also evaluate their studio resources, where they are pulling talent from, and the economy of the country they are in. It all comes into play with over-seas relationships.

• Access their abilities: Start with a Test (though tests done for free are becoming a thing of the past.)

• Start Small. Never outsource anything in the critical path until they have proven their ability to deliver. Start with a small outsourcing initiative and work toward larger ones.

• Stress test. If you are part of a publisher that has the budget, a stress test to assure quality deliverables is a possibility. Run the company through a rigorous, if short, milestone to help evaluate ability.

The tests which a company sends to us helps us to evaluate publisher preparedness for outsourcing. If the test is unorganized and improperly prepared, it may directly affect our decision to provide services to that publisher. - Rajesh Rao

Communication During the Outsource Process

Communication was toted at the holy grail of a successful outsourcing initiative. Some of the ideas touched on included:

• On the publishing side, there must be a single contact person appointed to handle outsourcing management and communication.

• On the outsourcing end, management must speak English.

• Processes and deliverables must be clearly defined and in-place before the initiative. This front-loads the directors of the developer, and should be taken care of in preproduction. (This is typically NOT how a developer works as specs and pathways are dynamic and may tend to change during the production phase.)

• QA must be tightly monitored. A finite number of asset-readdress iterations should be outlined in the contracts. (Again this is not typically how development takes place as leads and directors can tend to touch on changes throughout the entire production process as many times as they wish.)

• Invest in proper communication tools to help the initiative. Suggestions included enhancements on the open-source tool 'WIKI' to help facilitate communication between the development partners.

• You may consider hiring an experienced outsourcing consultant who can take facilitate proper communication throughout the process.

• Communication with a studio that is concerned about survival is tough; try and give the studio enough work for a long period of time to help alleviate financial concerns, consider including them in bonus plans, etc. This helps the partnership and helps the outsourcing house become invested in the product.

• Set up frequent deliverables and milestones to ensure constant interfacing.

Make sure there is at least one person in your development structure that speaks the language of the country you are outsourcing to. - Dan Bernstein

Depending on the relationship, contracts, and strategy you set up between you and your outsourcing partner, be prepared for what you need in a relationship. If the partner is going to be more involved in a development process that is changing and dynamic, make sure you prepare for that contractually and financially. - Emilie 'Tobi' Saulnier

Working With Different Time Zones

Time zones were talked about unanimously as a positive thing. The overlap in working schedule typically fostered a good leap-frog mechanic for feedback and communication.

• In a country like India, or China, the night and day are offset – this means they work a full day (while you are sleeping) and have a report available at the end of their day and the beginning of yours. You, as the developer can give feedback throughout your day, and they will have it at the beginning of their work day.

Consider initiatives to countries in your current time-zone i.e. Chile, as the same time-zone fosters a same-day working mechanic – Jason Robar

How Can a Publisher Protect Their IP

This concept was brought up several times. There wasn't much the panel offered regarding this topic and, actually, seemed to avoid it as much as possible. Bottom line I pulled from the meeting was, there is not much that can be done to protect IP shared with an outsource provider. Here again, the most important factor seemed to be the relationship you are able to develop with your outsource partner.

Some helpful comments offered:

• IP protection comes down communication and trust with a business partner.

• If the publisher shares business incentives\bonuses\royalties with their outsourcing partner, there is some incentive to help protect IP.

• Never hand over the entire IP package to one person at one time. Split it up. Only give what is required to complete tasks. Only hand IP to management (i.e. The leads). Make sure only those who need the access get access.

• Security in overseas countries is less expensive. Check employees for usb-cards. No Internet access for employees.

What are Publishers and Providers doing to prepare for the future of Outsourcing in the Game Industry

These answers were in response to the question I proposed at the workshop.

• Dhruva is investing in an external UK company created to help publishers break down the outsourcing processes and help identify and assess what parts of the production process can be outsourced.

• Vykarian is helping publishers by having project liaisons in-house to help the communication and management of the external project go more smoothly.

There is a real lack of management experience in the gaming industry. It is very difficult to find organized and experienced talent who understand development and outsourcing management procedures and processes. - Richard Vogel

Because of the rapid pace of technology development and the reinventing of utilized processes and procedures, the game industry is at a organizational disadvantage at this time. This, in relation to the film industry which has been working with standardized processes for a much longer time. - Emilie 'Tobi' Saulnier

Perspective

There was some good information covered during the workshop, but I believe it may have been frustrating for many as there were topics deemed very important by everyone that were only touched on lightly. There seems to be two separate camps dealing with outsourcing: (the minority) those who have been using and investigating processes over many years, and (the majority) those who are just beginning to look at the possibility of using outsourcing in their development business models.

What I believe wasn't covered well: (Keeping in mind this is a workshop\open forum environment.)

• Where to go for outsource information, company assessment, and knowledge.

• IP protection.

• Structured best-practices process and procedures.

It seems the majority of the industry (from the general feel of the workshop) is still looking at outsourcing as a firefighting tool for simple team scale-ability and budget management. Although outsourcing can be used to benefit developers this way, the future of outsourcing is much more robust. As we move into next-gen budgets and address gamer expectations we will be looking outside our studios not only for scalability, but for expertise in different areas. We will see an increase in small companies specializing in particular facets of game development sought out for their expertise and incorporated into the development cycle. Look for further papers and articles regarding this at OutsourceReport.com.

-Jonathan Hales

President

OutsourceReport