Report: Outsourcing Alone Not The Answer To Big Cost Savings

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. "Anyone expecting an automatic saving just from placing work in another territory is likely to be disappointed," said Beriah's Kevin Hassall. "A project in Asia won't be nearly as cheap as the salaries would suggest, and in many cases a Western European developer can deliver a project more cheaply than an Eastern European team." Salaries for developers in some territories can be in the range of as little as $400 to $2,000 per month, which would suggest extremely high cost savings for a project. But those savings are "eroded in reality," Beriah said. A theoretical U.K.-based project relying entirely on outsourcing may be only 19 percent cheaper than an internal U.K. team, the report said, even though salaries in some outsourcing territories might just be one-fifth to one-half that of a U.K. developer. While Asia has some of the lowest salaries, outsourcing to the region is "less attractive than either South America or Eastern Europe," Beriah found. "Asian developers certainly have the lowest cost per man month, but not necessarily cost per work." Though Beriah doesn't specify why this should be the case, anecdotal information indicates that cultural differences, alongside difficulty finding partners and perfecting workflow, can make a major difference to overall outsourcing costs.