Staff Productivity
Beyond the cost of labor, the experience level of the staff directly impacts productivity. The graph to the following page shows average full-time employee cost in blue, average productivity in green and overlays the computed cost as the red line. (The graph only represents the cost side and does not attempt to compensate for any benefit other than “productivity.”) Costs are typically impacted by
five variables.
- Nature of services delivered: Billing rates charged for high-end, complex services are higher compared to art asset creation service
- Type of service provider: Scale, capabilities and branding impact pricing. Tier-1 service providers charge a higher margin but at the same time their operating costs are higher
- Utilization rate: Consistency in utilization rates of productive resources leads to stability in operations and predictable cash-flow. Sudden spikes or dips in utilization rate may impact the cost and billing rates
- Rework effort: Rework effort directly adds to the cost of service delivery to the client through additional effort by the service provider, and additional management and governance effort by both service provider and the client
- Workflow maturity: Maturity and consistency of the workflow, as well as the review and governance mechanism between service provider and customer may impact the billing rates. For example, if review by the client takes a week longer than expected, the service provider resources may be under utilized during the period of review and approval.
Intellectual Property
A key challenge with the gaming and entertainment industry is security (physical and logical), and the protection of IP during game creation. Game development requires various layers to align the characters, environment, storyboard and animation. Whether the game mimics sports or creates new worlds in role-playing games, each layer involves distinct level of global services and the potential for theft.
In the gaming industry, IP theft can be as overt as pirated copies or subtle as theft of code that enables new animation functions or mimics how characters interact with the gaming environment. Every exchange of information across international borders or between service providers becomes a potential breach point.
To mitigate risk, most gaming companies currently leverage captive units in global sourcing locations — units that feel associated with the corporate objectives, and are less likely to compromise company secrets. Ironically, a greater number of IP losses occur because of disgruntled or greedy employees than through outsourcing service providers.
Outsourcing companies, whether in Delhi or Dalian, coach employees on the criticality of IP protection and client data. Corporations and countries alike realize that their reputation relies on secure and protected development. A single breach within a provider or within a country can create a public-relations challenge that requires years to overcome.
Game development and entertainment companies face a complex array of issues when evaluating global services. The diversity of skills required is more extensive than in traditional software or business-process outsourcing. This complexity makes location analysis and salary benchmarking difficult for the gaming companies. On the other hand, however, this also forces the developers to consider opportunities of entering regions that are outside traditional markets. In addition to salaries and business considerations, these game development companies should evaluate the productivity and relative risks for each region. The complete solution can optimize current operations and also guide strategic investments in the emerging markets.
Russ Metcalf is an MD at neoIT. He has extensive expertise in BPO and has helped establish over 20 contact centers in the U.S.A., India, Canada, South America and the Philippines.
