Big animation companies do it, large and small game studios do it, and it’s something that has always baffled me with long term business planning for companies. Outsourcing is still a large issue in the animation industry, companies outsource for a few reasons that are good in the short term, but which ultimately lead to a lot of issues and long term problems, all in the quest to save money and make as much profit as possible when they can.

I’m a small business owner so I get the appeal of cheap labor, but many companies don’t focus on the long term issues that come from outsourcing overseas to places with lower wages, lower skill, and the long term affects on their business.

Issue #1 – Language Barriers

If you’re outsourcing to a country where they primarily speak a different language, it’s going to be harder to get your point across in general, it’s easy for nuanced ideas and problems to crop up unless you have a good team of translators and training professionals, and often different countries like China don’t follow or understand our national laws surrounding the creative industry, which leads to more headaches and time training, translating and communicating more then you potentially have to, cause you to spend more money in general then you may have originally planned.

Issue #2 – Inept Understanding of United States Laws Protecting Intellectual Property, Copyright, Creative Commons, etc.

This is a big issue with outsourcing that I’ve seen many companies who have tried it run into over and over again. One of my friends gaming companies tried outsourcing their art production to India, only to have that company rip off pixel art from Metal Slug and try and sell it back to them. They had to try and explain to them that this artwork isn’t free to take and use, and that they would get in trouble using it in their game.

Ultimately they ended up canceling the title for a number of reasons, one of the largest being the huge amount of wasted time and money hiring people who didn’t understand the importance of intellectual property and copyright laws here that are designed to protect their product. They ended up running out of money they could have used to high someone who was more expensive, but also more professional.

This is not the first time I’ve seen a project bomb like this for the same reason.

Issue #3 – Training Foreign Artists Eventually Means They Will Make their Own Industry, Raise Their Own Wages, and Companies Have to Move On to Greener Pastures Anyway, Following Poverty Around the World

This happened in Japan around twenty or so years ago, A lot of children’s television here in the US was outsourced to Japan for a number of years. But Japan’s own animation industry was booming and making money, which means wages rose, and companies looking for cheap labor had to move on.

I personally have no problem with this, because it means seeing more films and ideas and animated series from cultures I’m not familiar with. But for companies aimed at long term growth and planning, this happens over and over again, every single time they move operations.

Moving operations is often expensive, and fraught with issues, so why do it at all?

Issue #4 – Loss of Value in Production

This seems to be another running problem. Foreign companies don’t tend to provide as much value as local professionals do. Their is often a huge drop in quality of work, communication problems, and inconsistency in production in many developing studios. It isn’t all about money. If you don’t get it, can’t service the client correctly, or can’t even communicate clearly, there is zero advantage in outsourcing a production overseas. Too many companies make it all about dollars, many US-based 3D companies outsource full projects overseas only to have a major quality drops or huge inconsistencies crop up in the finished work. That leads to poor turnout at the box office, lower sales, and thus lower profits in the end, which is exactly what the companies were trying to avoid. This is because real business is about relationships, service and quality, that all equals value. Paying less usually means you get what you pay for.

Issue #5 – The World is Becoming Flat

What does this mean exactly? It means that animation production everywhere is becoming more about offering good services, high quality and the best value at a reasonable cost because wages are rising in foreign studios. If you can’t offer all of that and more, you’re going to lose out on big budget projects. This is a direct consequences of what I was saying in Issue #3. Training overseas studios at low cost means they’re eventually get good and their wages and skills will rise, meaning you can’t afford them anymore anyway, so money doesn’t rule anymore, and thinking it’s the only thing that matters now is becoming a moot point anyway.

So with all that said, the world of animation is shifting to more online content, which means the lower budgets that crop up are more easily tackled by small firms, people who own small businesses can still stay employed.

So if you’re a studios looking for value, don’t automatically jump onto the outsourcing bandwagon. I personally think seeing foreign animation is great. I’m a huge fan of animated films from Japan, and I’ve seen a few now from India that are really interesting, new, and refreshing. I’m all for more artists and a more global world with neat movies, series, etc coming into the main stream.

But if you’re looking for value, good communication, and reasonable pricing, it might be smarter to consider a local or US and Canada based small business, rather then looking overseas for the same thing.