Companies warned of Chinese outsourcing pitfalls

A new report from Pearl Research has highlighted pitfalls in Chinese outsourcing, as the region's videogame market is set to exceed US $1.3 billion (EUR 1bn) in 2008.

Outsourcing and development in the region will continue to grow, but the report warns that costs are not as cheap as some companies believe, with travel, training and project management eroding savings made in areas such as low labour costs.

Other challenges presented by outsourcing development in the region include concerns over product quality, protection of intellectual property and competition for skilled employees.

However, Pearl Research notes that as as the market matures, so will the long-term quality of output.

The report also notes that online casual gaming will make up 30 per cent of the Chinese games market in 2008, while the most popular Chinese MMORPGs can generate US $80 million (EUR 61.6m) annually.