At present, the gaming industry continues to grow and generate significant returns for investors. According to Global Games Market report by Newzoo, the global games market value has reached $137.9 Bn in 2018 (an increase of +13,3% from 2017) and is expected to surpass $165.9 Bn in 2019.
Following the world tendencies, Ukrainian game development industry is also flourishing. The Ukrainian developers created such well-known games as S.T.A.L.K.E.R., Cossacks, Metro, Sherlock Holmes series, Warface, World of Warplanes, and many others. The increasing number of the US and Western European companies сhoose to cooperate with Ukrainian game developers to turn their boldest game ideas into reality.
Gaming businesses that want to expand their development capabilities and benefit from Ukrainian tech talent market, often consider two options: partnering with a local game development provider or setting up their own game development studio in Ukraine. Let’s take a closer look at game development in Ukraine and find out which way is more beneficial.
Game development in Ukraine
Ukrainian game development market is booming. According to Game development in Ukraine: Industry Guide, 20,000+ IT specialists in 100+ companies work in game development in Ukraine. Also, the Ukrainian gaming industry’s peculiarity is that multiple companies are developing their products and providing outsourcing services as well as consulting at the same time.
Source: Game Development in Ukraine: Industry Guide by Achievers Hub and UNIT.City
A thriving Ukrainian game development industry attracts more and more renown game publishers from countries across the globe. Some choose to set up their game development studios, while the others opt for outsourcing game development. For instance, Ubisoft, one of the top 15 public companies by game revenues, has game development studios in Kyiv and Odesa. Furthermore, such top game development companies as Wargaming, Plarium, Playtech, and Gameloft established their offices in Ukraine.
While there is a number of proven reasons for establishing a game development studio in Ukraine, finding a reliable partner with a strong game development team can bring you even more advantages. Here are the key factors that make outsourcing game development more profitable and guarantee a better return on investment.
Benefits of outsourcing game development compared to setting up a game development studio
As games become bigger and bigger, the global shift towards outsourcing game development is gaining momentum. Amy Hennig, the creative director behind Uncharted series, talked about it during DICE Summit in Las Vegas. Long story short, sooner or later the gaming industry will inherit the model used in the nowadays’ movie industry where the majority of the project, from actors casting to VFX post-production, is done with the help of outsourcing. After all, there are many reasons for such a shift.
Avoiding a ton of risk
Setting up a game development studio in an offshore location is like building a company from the ground up, yet in the unknown territory. Therefore, there are a plethora of risks associated with it. It’s important to build all the essential business functions such as IT, finance, HR, legal, facilities management, and others. In the country where you’ve never done business before, there will be a lot of pitfalls on the way.
On the other hand, a game development outsourcing company can cover all these tasks for you. An outsourcing vendor knows the local market and has all these functions up and running. So they take on all the risks associated with managing your product, people and processes. In the long run, this saves a lot of money, even though you pay for the vendor’s services.
When game companies decide to build their own development centers in Ukraine or any other offshore location, they understand that they would have to invest a ton of money at the outset. However, most of them believe that in the long-term perspective, it will be more cost-effective than partnering with an outsourcing provider. Oftentimes, it turns out the opposite. Lack of knowledge about the local market and an abundance of risks associated with running a studio in an offshore location drive the cost up high.
Even though the price for hiring an outsourced team looks higher at first, it covers all the overhead costs and allows to get rid of all the concerns associated with running a game development centre. First of all, you do not have to spend money on recruitment and training as these tasks are your partner’s responsibility. Then, you remove the financial burden related to software licenses and hardware, the office facilities, equipment, social benefits, and supplies. After all, you cut the costs that come with the legal fees and taxes.
So, if we calculate office rent & support costs, IT support (network, corporate systems, licenses, security etc.), working equipment (minimum laptop or PC usually depreciated over 2 years), recruitment, social package (sport and healthcare compensation, medical insurance, etc.), team benefits (events, team buildings, gifts etc.), HR support, legal, PE, and accounting services, it will create an additional overhead around 25-35%. This way, along with minimizing the overhead costs you also remove all the administrative hassle and can focus on your core competencies.
A well-organized team
When outsourcing your game development, you start working with a balanced and well-organized game development team. Your game development outsourcing partner is responsible for gathering a team with all the necessary skills for delivering a successful product. It might include a game producer, a game designer, programmers, artists, QAs, and any other specialists you need. When you work with a team of employees who have worked with each other before, it creates fewer communication and organizational issues and leads to more effective cooperation.
Better talent management
A partnership with a third-party vendor enables you to save time on recruiting, hiring and training employees. You do not have to go through the entire hiring process, that includes reaching the local pool of the candidates, selecting the most suitable ones, interviewing them, and choosing the best professionals. What is more, you do not need to invest your time and effort into employees’ onboarding and training as well as handle their resignation.
Outsourcing vendors usually have strong recruitment departments and effective recruitment strategies in place. Besides access to internal resources, they have databases of the candidates available on the local market. For example, we at N-iX have over 50,000 professionals of various qualification levels in our database.
Another important aspect that affects talent allocation is the company’s employer brand image. Unless your company is a world-known brand, you’ll have to invest in building a positive brand image to attract talent.
By partnering with an external company, you get access to its wide-ranging tech expertise and experience. Their skills and experience with different projects can help avoid the pitfalls on the way and provide brand-new effective solutions to the problems.
For instance, N-iX Game and VR Studio has worked on the projects in different domains and of different complexity. Our professionals have developed both casual and AAA games, Virtual Reality games, and multiplayer ones. We have experience in different tools and technologies such as Unity, Unreal Engine, Photon, and others. Also, we have a strong Art Production team that can turn any game to an exciting virtual world.
Easier to scale up/down
Throughout the game development process, companies often face the need to grow their engineering capabilities. Even in Ukraine, the country with a vast and rich tech talent pool, the recruitment process can take a substantial amount of time. Usually, the companies providing game development teams have well-established recruitment departments, which speed things up. Moreover, many IT outsourcing companies have a pool of engineers in-house, so when a customer requires to extend the team, they can use both their internal resources and recruitment capabilities. Conversely, you can easily scale down the team if needed without any harm to your business.
High level of flexibility
Working with an outsourcing company comes with a higher level of flexibility. If you do not need your employees on a full-time basis, you can hire them part-time or just for the specific tasks. You can also easily request additional resources only for a certain part of the project. After all, it is much easier to hire more professionals as long as all the recruiting burden lies on your software provider.
Even though Ukraine’s business climate has improved a lot in recent years, setting up a game development studio would be burdensome. You’d have to thoroughly study the Ukrainian legislation system, taxation, and security regulations, employment laws. Also, you need to find the best legal option for your business and undergo the process of registration. Meanwhile, Ukrainian software development companies have already set up an effective legal framework for maintaining partnerships with international clients.
Many companies come to Ukraine in search of highly qualified game development talent. Such gaming giants as Ubisoft, Wargaming Group, Playtika, Plarium, and Gameloft have already established their R&D centres in the country. However, if you want to save your time and money, a viable option is to find an experienced and reliable game development partner.
N-iX is a trusted software development company with over 900 expert software engineers and more than 16 years of experience in delivering top-notch software products. Our Game and VR Studio specializes in full-cycle game production, VR solution design and development, and art outsourcing services. The studio comprises 70+ specialists, including game artists, Unity and Unreal developers, game designers, testers, and other experts that take on even the most ambitious projects. Check out our portfolio for details and this short video overview of N-iX Game and VR Studio.