Author: by Kathy Schoback, Staff, Shanghai

GDC China kicked off in Shanghai with a keynote from Epic China CEO Paul Meegan discussing 'The Possibilities and Perils of Production Outsourcing, And How It’s Changing the Way Games Are Made', and Gamasutra was there to report his conclusions. Meegan, who formerly ran Ubisoft Shanghai, recently set up the relatively low-profile Epic China, previously revealed at Tokyo Game Show 2006, and his speech at the inaugural GDC China conference, co-run by [Gamasutra owner] CMP and IDG, covered the bases, from why to outsource to some of the pitfalls of doing so. Epic China has been set up to provide outsourcing help both to Gears Of War creator Epic and to associated companies using Unreal Engine 3, and already has a large China-based staff working on asset creation for games - thus Meegan's keenly awaited speech. In the first place, it was discussed why game business owners might want to outsource. Meegan gave an example of an artist in the West with a base salary of $65,000, and possible total compensation (including benefits and bonuses) of as much as $100,000 - that's $8,300 per month average. This compares to $3,000 - $5,000 per month for average outsourcing costs. In addition, efficiency in terms of not having full-time employees idle on staff with nothing to do was vital, according to Meegan. He suggested that on a major game project, as much as 750 man-months of idle time can occur from among 1450 total man months due to dependencies and varying work loads - a worst case scenario, but one with only 60% efficiency. He then noted than the ideal of close to 100% efficiency with full-time employees is to have multiple teams on multiple staggered projects, but noted that "this probably never happens" in reality. He also commented that it is often common for teams to work at overcapacity (the so-called 'quality of life' issue), with associated overtime, lower quality, delays. Meegan's suggested alternative is to keep fixed costs set and hired internally, and then use external production for variable costs in production, paying for resources when you need them. So, how to best use outsourcing? Epic's example, according to Meegan, is Gears of War, which had a small team of 32 core developers, a 2-year development cycle, and 50%-60% of the budget of a comparable big studio, with significant parts of its development outsourced. He suggested that the game biz can currently be compared to a to pre-United Artists Hollywood, where studios use the people and idle capacity they already own. The risks are that you might have the wrong people for job, get project bloat, and possibly get to the stage where there are 4-year production cycles and enormous budgets Epic's solution that can be leveraged elsewhere? Use a small, tightly-focused core team focused on creating value - using middleware and investing carefully in differentiating projects. In addition, practice targeted hiring, purpose-built for the project, and with exactly the right skills and passion for that game. You can then supplement this with cost-effective outsourced content production. The end result? What Meegan suggested could be a "new renaissance for independents", with teams of 10-20 people focused on IP development, multiple medium exploitation, at a low operating cost, and overall project-motivated (not company-motivated). Could this model result in high mobility among individual developers, like movie craftsmen, Meegan asked? The final section dealt with how to do outsourcing well, since the Epic China CEO pointedly suggested that outsourcing is a "relationship built on lies", with the vendor motivated to win the project by possibly overcommitting, and clients want to minimize cost and maximize quality. However, he suggested that it is possible to build stable partnerships between core and outsourcing teams, building personal relationships that enable embedding of staff - it's less energy to maintain relationships than build new ones. But he suggested it's still worth building multiple outsourcing studio relationships as backup. In addition, Meegan cautioned that outsourcers need to be prepared with a thorough preproduction phase, otherwise the project will be a waste of time and money, and you will sour your internal team on working with outsourcers in the future. His conclusion? Outsourcing is all about leverage - you can use little time and money to accomplish a lot, if you outsource the right kind of work, and choose partners who can do the work with limited iterations.