Alla Khramtsova and Alexander Zaslavsky - PLAYING THE OUTSOURCING GAME: A HANDS-ON GUIDE

Playing the Outsourcing Game: A Hands-On Guide
How to Exploit External Resources for Casual Game Development in a Global Market

Alla Khramtsova and Alexander Zaslavsky
Casual Connect Magazine Summer 2006

The fast growth of the casual games industry in recent years has attracted a number of new players to the market while established game companies seek to expand their business both in scope and size. One of the basic problems facing both American and European companies is choosing a sound business model for organizing the game production process.

The present day casual gaming industry is characterized by a few very important and closely related trends: 1) growing customer expectations; 2) increasing complexity; and 3) the rising cost of designing and developing new products. As a result, more and more companies are looking for development alternatives that can help them lower the costs of production without compromising the quality of the product.

Choosing to Build, to Buy, or to Outsource
Whether a company is trying to enter the casual gaming market or is aiming at expanding its operations, there are the three main routes it can take, each having its own pros and cons:

Setting up a brand new development studio
Acquiring an established studio
Outsourcing development altogether

Of these, setting up a new studio is probably the most difficult inasmuch as it requires higher initial investments both to set up adequate infrastructure and to find and hire a skilled development team.

The other two approaches are less prone to failure, as they supposedly build upon an existing team and allow a company to draw heavily upon previous experience, established brands, and proven IP. The choice between these strategies may be based on several considerations. While the purchase of a studio may be more cost-effective in the long run, outsourcing requires significantly lower initial investment and allows for more cautious testing of a new market. In fact, a relationship can be started on a project-by-project basis and may ultimately lead to investment or acquisition down the line. In any case, cost considerations make it reasonable to shift at least part of the design-development-marketing chain into countries with cheaper, skilled labor resources.

Outsourcing can be a good solution in two ways: first, at each level of game production, outsourcing can help to split the complexity into more manageable pieces; and second, outsourcing to cheaper markets may reduce costs without degrading the quality of the final product. In fact, the cost savings may even make it possible to add bells and whistles to games that could not be added otherwise.

Eastern Europe: A Popular Outsourcing Destination
One of the most popular outsourcing destinations nowadays is Eastern Europe. Game development in Eastern European countries often started in research institutes where IT workers had just enough free time, knowledge, enthusiasm, and unused creativity to create some really compelling IP. The best known of these is Alexei Pazhitnov, the legendary father of Tetris.

Analysis of living conditions in Eastern European countries gives a clue to the understanding of this market’s explosive growth, both in reference to the number and the size of IT companies. As a result of lower cost of living, prices are more than competitive in Eastern Europe, where an average-skilled programmer is paid less than 50% of what a similar programmer would receive in the USA or in the most developed EU countries.

Outsourcing companies are concentrated in big and industrially-developed cities which are simultaneously scientific centers with many universities and research institutes: Dnepropetrovsk, Kiev, St. Petersburg, Kaliningrad, and Novosibirsk (Russia), Kharkiv (Ukraine), and Minsk (Belarus). Local “silicon valleys” have grown strong in these cities thanks to a high concentration of highly-skilled and inexpensive workers living in tough economic circumstances. Such conditions make these cities fertile ground for investors seeking high return on investment in the game development business.

The Benefits of Outsourcing to Eastern European Studios
There are now big studios in Eastern Europe providing highly-professional game development services with teams who have a strong history of fulfilling their contractual obligations with proper resources and experience. The benefits of working with an established Eastern European game development studio are numerous:

Low Cost

All of these markets enjoy large cost advantages over the US and Western Europe. Even within Eastern Europe, however, costs will vary. For example, it tends to be more expensive to develop in Russia than in Ukraine, where for the same money you can hire a more experienced professional than in Russia.

Highly Skilled Programmers and Artists

Because of the excellent training and experience of developers in Eastern Europe, the quality of their work is comparable to that of developers anywhere else in the world.

Project-based Billing
Work is mostly done on a project basis in Eastern Europe, thus eliminating the risk of paying for people to become trained (or worse: to sit and do nothing). You simply pay for the final product that is tuned completely to your liking, regardless of how many man-hours it takes to get it that way.

Available Resources
There is an abundance of talent in Eastern Europe, which makes it easy to find resources for just about any project. And of course, the bigger the company the better. Although a company with just 10 people may find it hard to immediately allocate resources for your project, if there’s 50 people on staff, your project can get resources at once.

Smooth Communication
Deep experience in the IT field, combined with a high level of English proficiency, eliminates most communication challenges and simplifies the translation of technical documentation.

Conclusion
Before deciding to engage a company to build the game of your dreams, it’s of utmost importance to have the understanding that outsourcing is a service and a continuous process. It takes time and mutual effort to learn to understand each other and create a good working relationship.

Eastern Europe is a region which is close to Western Europeans and Americans, not only geographically, but also mentally and culturally as well. Its full potential is yet to be discovered.

Alla Khramtsova and Alexander Zaslavsky both work for Absolutist Ltd., an experienced team of professionals in programming, design, multimedia and marketing that create and publish games for Windows, PalmOS, PocketPC, Mac, Linux, Windows for Smartphone, Symbian series 60, Symbian UIQ, Smartphones, N-Gage and J2ME platforms. The company also creates Flash, Java and JavaScript games. Absolutist began developing casual games in 2000 and now has over 70 employees, 60 unique titles for PC, and 25 titles for handhelds.

Note: The Casual Games Association will be co-hosting an event in Eastern Europe Fall 2006. Visit our website for more details.

HOME \| LECTURES & ARTICLES \| PRODUCTION & DEVELOPMENT \|PLAYING THE OUTSOURCING GAME: A HANDS-ON GUIDE Playing the Outsourcing Game: A Hands-On Guide How to Exploit External Resources for Casual Game Development in a Global Market Alla Khramtsova and Alexander Zaslavsky Casual Connect Magazine Summer 2006 The fast growth of the casual games industry in recent years has attracted a number of new players to the market while established game companies seek to expand their business both in scope and size. One of the basic problems facing both American and European companies is choosing a sound business model for organizing the game production process. The present day casual gaming industry is characterized by a few very important and closely related trends: 1) growing customer expectations; 2) increasing complexity; and 3) the rising cost of designing and developing new products. As a result, more and more companies are looking for development alternatives that can help them lower the costs of production without compromising the quality of the product. Choosing to Build, to Buy, or to Outsource Whether a company is trying to enter the casual gaming market or is aiming at expanding its operations, there are the three main routes it can take, each having its own pros and cons: Setting up a brand new development studio Acquiring an established studio Outsourcing development altogether Of these, setting up a new studio is probably the most difficult inasmuch as it requires higher initial investments both to set up adequate infrastructure and to find and hire a skilled development team. The other two approaches are less prone to failure, as they supposedly build upon an existing team and allow a company to draw heavily upon previous experience, established brands, and proven IP. The choice between these strategies may be based on several considerations. While the purchase of a studio may be more cost-effective in the long run, outsourcing requires significantly lower initial investment and allows for more cautious testing of a new market. In fact, a relationship can be started on a project-by-project basis and may ultimately lead to investment or acquisition down the line. In any case, cost considerations make it reasonable to shift at least part of the design-development-marketing chain into countries with cheaper, skilled labor resources. Outsourcing can be a good solution in two ways: first, at each level of game production, outsourcing can help to split the complexity into more manageable pieces; and second, outsourcing to cheaper markets may reduce costs without degrading the quality of the final product. In fact, the cost savings may even make it possible to add bells and whistles to games that could not be added otherwise. Eastern Europe: A Popular Outsourcing Destination One of the most popular outsourcing destinations nowadays is Eastern Europe. Game development in Eastern European countries often started in research institutes where IT workers had just enough free time, knowledge, enthusiasm, and unused creativity to create some really compelling IP. The best known of these is Alexei Pazhitnov, the legendary father of Tetris. Analysis of living conditions in Eastern European countries gives a clue to the understanding of this market’s explosive growth, both in reference to the number and the size of IT companies. As a result of lower cost of living, prices are more than competitive in Eastern Europe, where an average-skilled programmer is paid less than 50% of what a similar programmer would receive in the USA or in the most developed EU countries. Outsourcing companies are concentrated in big and industrially-developed cities which are simultaneously scientific centers with many universities and research institutes: Dnepropetrovsk, Kiev, St. Petersburg, Kaliningrad, and Novosibirsk (Russia), Kharkiv (Ukraine), and Minsk (Belarus). Local “silicon valleys” have grown strong in these cities thanks to a high concentration of highly-skilled and inexpensive workers living in tough economic circumstances. Such conditions make these cities fertile ground for investors seeking high return on investment in the game development business. The Benefits of Outsourcing to Eastern European Studios There are now big studios in Eastern Europe providing highly-professional game development services with teams who have a strong history of fulfilling their contractual obligations with proper resources and experience. The benefits of working with an established Eastern European game development studio are numerous: Low Cost All of these markets enjoy large cost advantages over the US and Western Europe. Even within Eastern Europe, however, costs will vary. For example, it tends to be more expensive to develop in Russia than in Ukraine, where for the same money you can hire a more experienced professional than in Russia. Highly Skilled Programmers and Artists Because of the excellent training and experience of developers in Eastern Europe, the quality of their work is comparable to that of developers anywhere else in the world. Project-based Billing Work is mostly done on a project basis in Eastern Europe, thus eliminating the risk of paying for people to become trained (or worse: to sit and do nothing). You simply pay for the final product that is tuned completely to your liking, regardless of how many man-hours it takes to get it that way. Available Resources There is an abundance of talent in Eastern Europe, which makes it easy to find resources for just about any project. And of course, the bigger the company the better. Although a company with just 10 people may find it hard to immediately allocate resources for your project, if there’s 50 people on staff, your project can get resources at once. Smooth Communication Deep experience in the IT field, combined with a high level of English proficiency, eliminates most communication challenges and simplifies the translation of technical documentation. Conclusion Before deciding to engage a company to build the game of your dreams, it’s of utmost importance to have the understanding that outsourcing is a service and a continuous process. It takes time and mutual effort to learn to understand each other and create a good working relationship. Eastern Europe is a region which is close to Western Europeans and Americans, not only geographically, but also mentally and culturally as well. Its full potential is yet to be discovered. Alla Khramtsova and Alexander Zaslavsky both work for Absolutist Ltd., an experienced team of professionals in programming, design, multimedia and marketing that create and publish games for Windows, PalmOS, PocketPC, Mac, Linux, Windows for Smartphone, Symbian series 60, Symbian UIQ, Smartphones, N-Gage and J2ME platforms. The company also creates Flash, Java and JavaScript games. Absolutist began developing casual games in 2000 and now has over 70 employees, 60 unique titles for PC, and 25 titles for handhelds. Note: The Casual Games Association will be co-hosting an event in Eastern Europe Fall 2006. Visit our website for more details.