{"id":1407,"date":"2011-05-22T16:21:28","date_gmt":"2011-05-22T15:21:28","guid":{"rendered":"http:\/\/t-machine.org\/?p=1407"},"modified":"2011-05-22T16:21:28","modified_gmt":"2011-05-22T15:21:28","slug":"it-seems-mr-outsourcer-that-youve-been-living-two-lives","status":"publish","type":"post","link":"http:\/\/new.t-machine.org\/index.php\/2011\/05\/22\/it-seems-mr-outsourcer-that-youve-been-living-two-lives\/","title":{"rendered":"It seems, Mr. Outsourcer, that you’ve been living -two- lives…"},"content":{"rendered":"

IMHO, there are two types of outsourcing in the games industry; one type is much easier for the outsource company to get off the ground, and is therefore much much more common.<\/p>\n

Two types…<\/h4>\n

Type 1: lowest-hanging fruit<\/h5>\n

Signs:
\n…”we delivered EXACTLY your spec – including the bits we knew were typos”
\n… managers (but none of the staff) are ex-industry people with lots of management experience
\n… very low-cost (often: 20% or less of the cost of doing it in-house from scratch)
\n… professionally managed by account directors (may be *called* project managers)
\n… very VERY large number of clients and portfolio pieces
\n… always able to fit you in (they work very fast \/ efficiently, and churn stuff out fast; they can “scale up” relatively easily \/ quickly)
\n… terminology is usually about “booking you in”, etc – words from assembly-line companies<\/p>\n

Type 2: specialists<\/h5>\n

Signs:
\n….expensive
\n… less interested in the spec, more interested in the overall goals
\n… the staff (not the managers) are typically ex-industry people with lots of experience
\n… you might have to wait 3-9 months for them to become avaialble for your project
\n… terminology is usually about “product development”, etc – words from development studios<\/p>\n

It’s all in the Aspiration…<\/h5>\n

Type 1 companies are either making a fast (but small) buck, or are very smart. The smart ones are growing as fast as they can, and building up a cash pile. Sooner or later they setup internal, wholly-owned studios, and build their own product – which has a much higher profit margin. They offset the risks \/ costs by using their own (now huge) outsource teams to do lots of the work.<\/p>\n

Type 2 companies often drift back and forth between being outsourced dev, and being paid-by-the-hour Consultants. These companies survive or fail a lot more on their pure skill and unique abilities\/experience; their profit margins are much higher, but they have way fewer contracts and growth \/ scaling up their team is much harder.<\/p>\n

How should you deal with them?<\/h4>\n

Most of what you hear about “working with outsourcers” really only applies to the first group, e.g.:<\/p>\n

    \n
  1. write an AWESOMELY accurate + detailed spec. Triple the amount of time you normally spend speccing stuff, to make sure this one is perfect. (PS: as a side-effect, you’ll end up answering lots of design qestions you probably had been avoiding or weren’t aware of yet – that’s often hard work but helpful to you in long run)\n
  2. be damn sure they’re profitable and stable – these companies often operate on tiny profit margins until they’ve scaled up. The less-smart ones never manage to increase their profit margins\n
  3. don’t be afraid to hurt the business-relationship: in their business, they have to accept every project that comes along. These companies are ever-hungry for work (to fuel their growth). Bear in mind they have aggressive, skilled salespeople, and probably love to play hardball negotiation\n
  4. think of them as vendors, “selling” you a pre-packaged product that you specced 6 months earlier\n<\/ol>\n

    For type 2 companies, I feel the rules of engagement are different:<\/p>\n

      \n
    1. don’t waste time on detailed specs: much of these guys value is that they can and will (re-)write your specs for you to be closer to what you wanted\/needed\n
    2. be very careful of the relationship – you’re dealing directly with high-skilled experts, and there’s relatively few direct-alternative companies. Don’t piss them off, or underpay them, or they might not work for you again – you’re not “negotiating with a salesperson”, you’re “distracting an expert who’d much rather be off working than sitting around arguing over price \/ service \/ SLA”\n
    3. think of them as freelancers (although they’re obviously a different beast – you’re paying them to do a lot more than just freelance, much more than just follow orders), working with you to build something day by day\n<\/ol>\n

      One of these lives has a future, and one of them … does not<\/h4>\n

      In my experience, the first group often have a clear goal of success and riches, and a specific business plan to take them there. Whereas the second group often operate more as a “lifestyle business” – i.e. the individuals a making a decent annual wage, they’re doing something they enjoy, and it’s low-stress. They like the work, they get enough profit per project that they can survive through “lean times” when the market goes into recession, etc.<\/p>\n

      So, in most cases, there’s a high rate of “successful” type-1 companies (high turnover, employing 50…100…or several hundred…staff, lots of cash flowing around). Successful in sales terms, but … typically struggle to make anything beyond a low profit margin.<\/p>\n

      And a very low rate of “successful” type-2 companies (most of them are just pootling along, happy in their own little world, but neither growing nor shrinking – from an investor perspective, that’s a dismal failure: you’ll never get to sell your stake for $$$).<\/p>\n

      On the other hand, it’s usually the second group that contains the really huge successes (albeit a very small minority): the companies that pivot, the teams that come up with a huge money-making idea “unexpectedly”. There’s few better ways for a group of experts to “invent” the Next Big Thing, than to service dozens of clients a year for a couple of years and bide their time till they spot a gap in the market. By that point, they’re in a perfect position to capitalize on it…<\/p>\n","protected":false},"excerpt":{"rendered":"

      IMHO, there are two types of outsourcing in the games industry; one type is much easier for the outsource company to get off the ground, and is therefore much much more common. Two types… Type 1: lowest-hanging fruit Signs: …”we delivered EXACTLY your spec – including the bits we knew were typos” … managers (but […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"_links":{"self":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/1407"}],"collection":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/comments?post=1407"}],"version-history":[{"count":0,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/1407\/revisions"}],"wp:attachment":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/media?parent=1407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/categories?post=1407"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/tags?post=1407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}