Why outsourcing doesn't work

Streamline Studios is a support studio. It has created original titles in Hoopworld and Axon Runners, but is best known for its work on AAA titles like Unreal Tournament III, BioShock Infinite, and Street Fighter V. You could call what they do work-for-hire, or outsourcing, or external development, but company co-founder Stefan Baier told GamesIndustry.biz recently he isn't a fan of those terms.

"The industry has rotated through this language for years, and it has become shorthand for basic, low-value transactional contract engagements," Baier said. "As opposed to what they should be, equitable partnerships.

"The truth is that many external developers are highly capable veterans of the industry, who either released their own games yesterday or will release their own games tomorrow. Their value needs to be recognized. These terms, and the low-value connotations point to a legacy of outdated methods, perpetuated by a small group of people in the industry who are focused on processes. They feed on ignorance and fear rather than partnership and value creation that emerge through highly integrated pipelines."

"If we only bring the business people together, isolated from the creative staff, we neglect the actual value of all creative companies, which is in the creative teams themselves"

As Baier sees it, the current model of outsourcing most commonly practiced in the industry simply doesn't work.

"The problem is the short-term thinking that game developers have with outsourcing," he said. "It's this mindset that deeply affects how companies define their relationship with external companies, and it's creating problems for both parties. Traditional outsourcing no longer works to support the complex, collaborative nature of modern game development. There are too many moving parts and it's become a limiting factor for many developers who struggle to outsource efficiently. The perception of companies that outsource is that they settle for below-the-line prop work as the best possible outcome. But this is a myth perpetuated for most outsource work; the right people don't talk to each other but channel through gatekeepers who can no longer cope with the demands of multiple teams communicating at the same time."

Baier sees that layer of middle management handling interactions between the internal and external creative teams as the biggest point of friction to be overcome.

"The majority of the time these managers are not well versed in production where they emphasize spreadsheets and cost rather than a strategic use of talent, effort and business savvy. The net result is that the outsourcing team is hamstrung far before the development team is actually brought into the process."

Baier expressed surprise at how this situation came to pass in games, considering the collaborative nature of software development. It's one of the reasons Streamline usually involves creative staff in even the first meetings when discussing partnerships.

"The issue that most companies will face in this field is business focused thinking," Baier said. "If we only bring the business people together, isolated from the creative staff, we neglect the actual value of all creative companies, which is in the creative teams themselves."

Granted, an external partnership of the kind Baier describes requires a greater time investment up front than the standard approach to outsourcing, and companies looking for outsourcing help are likely doing so because they don't have time to get it all done themselves anyway. Spending that time to lay the groundwork for a partnership may be a bit counterintuitive, but it can pay off in the end.

"The problem is many games companies don't execute this very well and end up having poor external relationships while still getting stuck with a lot of the work intended to be externalized," Baier said. "It's looking at external teams the wrong way, and this leads to a short-sighted, 'transactional' kind of outsourcing which doesn't work. Well-executed partnerships liberate the original developer instead of tying them down. But, yes, that requires an upfront investment of time, planning and relationship building. Given the strategic nature of the process, outsourcing isn't something that you wander into, it's something that needs to be planned, implemented and executed at the highest levels of management.

"If you don't share with another team, don't train, don't consider long term scenarios of what needs to get done and how to mitigate the risk of the journey, when things go wrong, you're forced into a crunch, into an all or nothing death march"

"The way you could look at it is this. Finishing a game is an endurance race, like taking your ship across the ocean. Hopefully, you make safe harbor before running out of food or catching fire. The bigger the ship, the bigger the stakes. Now, if you spare some timber, chart a plan together with another ship, that comes along for the journey, share the risk, share responsibility and build together - you have a backup plan if something goes wrong. If you get behind, go adrift, lose a team internally, you can cope. Adjust the sails, slight change of course, but still move ahead - together.

"But if you don't share with another team, don't train, don't consider long term scenarios of what needs to get done and how to mitigate the risk of the journey, when things go wrong, you're forced into a crunch, into an all or nothing death march. Why? Because without a focus on building a backup plan, you're exposed, with no help other than a couple of small one-time rafts you considered partners. That's all you allowed them to build. And there's only so much they'll be able to do."

As time goes on, Baier sees a greater need for companies like his. Even with the AAA market seemingly consolidating to a handful of major players pushing a narrowed slate of releases, Baier said there's no shortage of work.

"While it's true larger game companies have somewhat consolidated around tent-pole titles, partner studios have also consolidated and established specific domain leadership, something they're well known for and where they don't face as much competition," Baier said, adding, "Further, the complexity of the titles has increased tremendously. Demands of modern games outpace most game company growth capacity and many quickly hit a limit to further growth. Do you really want to hire another 200 people in San Francisco?

"While the big titles have decreased, the stakes for those companies are now higher, and even large publishers cannot afford to see a $100 million launch go wrong. The last few years have seen an ever-growing demand within the games industry. Consider the huge interest in VR, gamification and movie-game crossover titles coming from film, automotive, even medical fields outside gaming. The opportunities for creative companies in our sector are in fact only increasing and broadening further. Industry managers perpetuate myths about a shortage of work to lower prices, pitting service companies against each other. The perception is just not in proportion to the reality."