Study Finds Outsourcing Benefits Are Limited for Industry

By Frank Ling, GN Senior Writer

In the business world, the practice of outsourcing has become a standard practice in order to cut costs and increase profit margins. The use of outsourcing has also been incorporated into the production of video games. However, the results of outsourcing by some game companies seems to be less than spectacular, according to a recent survey conducted by Amritt Ventures, a corporate advisory company. The study was conducted from a pool of 317 US game industries that used outsourcing. The survey was conducted between May and July of 2006.

According to Amritt Ventures, 44% of the surveyed game companies expressed that they saved less than they expected. Another 20% said that their motivation to outsource was not based upon a need to save money. Other unforeseen problems surfaced for those companies involved in shipping their projects overseas for production. 58% said that the process was “significantly harder than they had anticipated, while only 18% found it much easier than they expected.”

Gunjan Gabla, head of the Game Industry Practice division of the firm said, “It’s reasonable to add new vendors due to capacity issues as 19% of our respondents did, or to reduce risk, as another 15% of respondents reported. But disappointments over quality and schedule indicate systemic issues.”

However, despite the problems associated with outsourcing video game projects, Gabla feels that the use of this method of game development will continue. “Clearly global outsourcing is established as part of the ecosystem in the games business, despite current teething pains.”


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Author: GamerNode Staff View all posts by

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