Report: Industry turning to outsourcing
Next-generation development costs increasingly pushing publishers to shift their workload to Eastern Europe and South Asia, according to Screen Digest.
Outsourcing has been something of a hot topic in business and politics for the last few years, but if a new report from UK-based research firm Screen Digest is right, it's likely to become one in gaming as well.
In fact, Screen Digest already refers to outsourcing as "a quiet revolution," estimating that the market for games outsourcing, practically nonexistent five years ago, will hit $1.1 billion this year and $2.5 billion by 2010. The report says that 60 percent of studios already use outsourcing to some degree, with that figure rising to 90 percent by 2008.
The report's author, Rick Gibson, blames the rising cost of next-generation game development for the bump in outsourcing. He says it's not only cheaper to outsource, but it also provides developers with flexible and temporary workers for more menial tasks, allowing in-house staff to spend time on more important work.
According to Gibson, "Outsourcing is in wide use today, but it is not a magic wand. You get what you pay for in the trade-off between price and quality, but the real costs of outsourcing are often below the line. This is forcing the industry to undergo a fundamental shift towards stronger project management skills, which have been lacking in many organizations."
However, Gibson also cautions that the demand for outsourced development will exceed the supply, resulting in "rising prices, continued suppression of the number of new titles in development, an increase of financing into the games services sector, and a number of new market entrants, particularly traditional media companies, whose entrance will be slow, difficult, but ultimately beneficial for the games industry as a whole."
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