The VFX Outsourcing Boogeyman

A vfx artist wrote a blog post:

Fast forward to 2010. With a decade of practice, India’s animation companies are now every bit as good as Hollywood houses, at a tenth of the price. If I was an entrepreneur, I’d be stupid to go with a Hollywood house. Just sayin’.

A common cynical thing I hear from some artists who have been laid off is “my job got outsourced to India” or “I better not ask for a raise this year or they will outsource my job”. I’ve posted in abundance that vfx jobs are going to the UK, Canada, New Zealand, and Australia because of government subsidies, not because the labor is cheaper.

So when I look at the evidence and get asked which countries are most threatened by outsourcing of vfx work you know what my answer is?

India and China.

The first image we have in our head is some poor Indian kid working hours out of a hut doing vfx. This is just not the case. As Technicolor’s General Manager in India said:

I see Indian studios themselves farming out work in the near future.

Why? Many of us are making the wrong assumptions about these developing nations.

The Cost Of Living Is Lower In China and India

False. In the global economy iPhones, iPads and other items have become a part of everyday living. What really blows many of my colleagues away is the cost of homes in countries like Shanghai, Beijing, Banglore, and Mumbai. Look at some of these ridiculous prices for such small apartments that rival LA and San Francisco:

The Wages Are Lower In China and India

This is true but not for long. Given the high cost of living, salaries in these developing countries are rapidly increasing. Year after year, Indian wages have had double-digit increases. Chinese laborers have protested and even committed suicide at a Chinese iPhone factory fighting for huge increases in wages. US salaries have either fallen or stayed stagnant.

The Quality Of Work In China and India Rivals The US

This is laughably untrue. Ask any vfx worker who has had to deal with Chinese and Indian vfx vendors and they will tell you the pain and the amount of extra iterations needed to get a vfx shot right. Will the work that they do improve? Yes. Will the work they do someday match ours? Yes, in maybe 10 years. However that is based on the assumption that US vfx work will not improve. As great as the developments have been in vfx, it’s still the tip of the iceberg. The level of improvement of vfx work in China and India has not kept pace with the rise in wages.

Catch 22 For India And China

The dilemma India and China face is that the first word that comes to mind for many producers is: CHEAP. The dwindling cost advantage has even made some Indian’s call for “The Coming Death Of Indian Outsourcing“:

The reality is that wages are rising in India. The cost advantage for offshoring to India used to be at least 1:6. Today, it is at best 1:3. Attrition is scary.

As wages rise in these countries they themselves will eventually be forced to send work to other countries with cheap labor. The cycle will keep repeating and continue. At some point, producers catch on that this costs them more money for very little quality. The video above is from Roadside Romeo, an animated film produced in India. It cost Disney $7 million over 2 years to make the film. The worldwide gross for the film was $2 million, $55,000 in the US. I’m pretty sure I could get a small group of US vfx workers and make something spectacular with the same time and budget.

What producers fail to miss is that vfx isn’t just about creating art, it’s an involved process that requires problem solving. Every shot is it’s own unique problem. It requires tools and convoluted pipelines and methods to solve those problems. If it was so easy to outsource vfx, why hasn’t that happened for flash animation? Flash is much easier to learn and execute than most vfx programs and while there are Indian vendors that offer Flash animation services, there is still a job market for Flash animators here in the states.

The American Dream

I am in no way saying that all Indian and Chinese artists are bad. There are many excellent artists there. The problem is they hit the pay ceiling too fast in those countries since it’s expected their work should be cheap. So what do those artists do? They leave and some of them come to America.

One Chinese artist I worked with barely knew any English. His new car  had dents and scratches all over from his bad driving. When we would go to lunch he would pull the parking brake at intersections so he wouldn’t accidentally run a red light. He was new to the country and struggling to get used to living in California. It made me wonder why he came here when he could have just stayed in China. He tells me in broken English:

Work looks easy now. What’s the next step? I don’t want to get old and die like this. I’m greedy man!

I responded:

No. You’re not Greedy. You’re an American.

It’s the thing we all too commonly forget. Every human being yearns to live to their fullest potential. Nobody likes to get ripped off whether they live in Mumbai or San Francisco. We all want the same thing and in vfx that means rising to the top, not racing to the bottom.

Soldier On.

35 Responses to The VFX Outsourcing Boogeyman

  1. NovySan says:

    I know of a tale in which work was outsourced to India, who outsourced it to Pakistan who outsourced it to CalArts students in Valencia.

  2. annonymous says:

    It is not just the tax breaks is the lack of overtime, where is it in the American dream we should work for free. Where is it we should bow thankfully for having a job we enjoy and have no say in where the work goes and weather we will have to abandon our home to work in the field we love or compromise work standards that were fought for for decades?
    The wages are lower in London and there is no overtime, so you know what that means, when the studio that is gonna make millions off your labor and love screws up and needs ridicules ot, yeah you get nothing for it, oh and if you don’t work it you will surely be let go, eventually.
    Even if the work returns which it appears somethings are, American studios are dropping salaries and benefits. Some commercial houses are even putting their employee taxes on the backs of the employees. Yeah the employees are paying their s\n tax and the commercial houses. Outsourcing does have a huge effect. How long do you think it will be till we simply can’t afford to work in vfx cause everything is being dropped in our laps. Sure there may be work here but who could afford to do it.
    If they can abandon entire shops they can manipulate the entire cost and that is exactly what they are doing. Yeah vfx may not be outsourced entirely but the race to the bottom has begun and there is no end in site. Every studio is struggling to under bid each other. Every studio is starting facilities with cheaper labor and pitching we have cheap labor, not we have talented artists.
    Outsourcing is dropping our value just as fast as it is raising the value of a handful of artists abroad. So though it may appear that there is some kind of balance cause studios in India are raising there rates, there isn’t and there is no intention for there ever to be one.
    This is the Nike business model when they get expensive dump them and set up shop in another country send people over to train them and then dump your pricey talent. This is just the beginning. There are all kinds of countries to exploit.

  3. anonymous says:

    Before I was laid off, the normal routine toward the end of each show became putting some of us more experienced artists full time on the task of fixing shoddy work from India.

  4. Wayne says:

    R&H and ILM

    ‘Before I was laid off, the normal routine toward the end of each show became putting some of us more experienced artists full time on the task of fixing shoddy work from India.’

  5. Hi there,

    i am the guy from the Chinese VFX window on VFXTalk. I like you post and comments here and also that you don’t put everything down from China and India. Like you mentioned do we have great artists in China and they could get work easily in L.A. or somewhere else, but you are right, they are too expensive for the domestic market and been asked many times to lower their standards to justify their lower wages in case some producers want to hire them for a job: Like saying:” Damn you are good, but we can’t afford you, so is it OK to do shitty work for us that we can pay you halve ?” No kidding, happend with us many times for so called 4A ad agencies here in China for global campaigns…unbelievable…i guess you are right, in reality it has nothin to do with India or China per se…its just this damn ‘globalization’ thing.

  6. […] pointed out that this is essentially the VFX outsourcing boogeyman argument used to scare VFX artists. The jury is coming back in on doing visual effects in developing […]

  7. […] pointed out that this is essentially the VFX outsourcing boogeyman argument used to scare VFX artists. The jury is coming back in on doing visual effects in developing […]

  8. […] pointed out that this is essentially the VFX outsourcing boogeyman argument used to scare VFX artists. The jury is coming back in on doing visual effects in developing […]

  9. […] job will eventually be outsourced to a developing country like India or China. I mentioned in a previous post that I feel this argument is routinely made by employers as a boogeyman argument. Hell, if it gets […]

  10. […] A similar situation occurs in China and I’ve called outsourcing to cheaper developing countries a boogeyman argument. Most of the people trying to say VFX will go to India and China are just trying to scare you. The […]

  11. […] I first started this blog, I asked a rhetorical question: when I look at the evidence and get asked which countries are most threatened by outsourcing of […]

  12. Mahesh says:

    I have to disagree with some some of the things that Americans believe about Indian animation and Vfx industry…

    1. Salary rise:- I am working as an senior animator in big Indian studio for the past 8 years and have worked on best of the outsourced projects that came to india but my salary is just 12,000 $/year (considered very good here) which is around 1:10 of the average salary in US for senior animator. I worked on 3 movies for US theatrical release which will/were released by big slates like Disney, lions gate and Universal…

    Even if my salary doubles in the next 3-5 years I will be working 5 times cheaper then US animators. While My experience would grows from B grade Hollywood movies to A grade during that time making it more worthy for my studio…

    2. India works on rubbish quality:- Tinker bell 1,2,3 and 4 for Disney were made in Indian. Entire Merry Madagascar and major part of Puss in boots were made in India for Dream Works Animation. There r a few upcoming movies for US theatricals to be released in 2012 and 2013 which will set new bench marks for sure.

    Some parts of vfx that R&H worked on were made in India… They even won Oscars for best VFX in them…

    I would not like to give the example of Alpha and Omega which was made in India as it sucks… And I believe roadside romeo was made to fail as it was directed by a failed actor!!!!!

    • American_artist says:

      Congratulation you idiot! You must be very proud. I’m guess your 120 sq foot home with a dirt floor, no running water, and an outhouse is treating you well. How is that retirement plan you got for yourself and your family going? I guessing at your salary by the time you are 65 years old you might have saved 2000.00 American dollars. At the same time the American studio executives are laughing all the way to the bank on the backs of you and everyone in your country. Now how do you feel?

      • mahesh says:

        You have no freaking idea how incredibly over priced the living condition in US and UK is. Person earning 1000$ here can have a great life. If you don believe plz Google.

        We get a 2 bedroom house (at least 800 to 1000 Sqft) at a rent of 100 to 150 $, you can have the best food even in overpriced Mc Donald here at 2-3$, its much cheaper and healthier if we cook at home. We can hence comfortably save half of my salary every month.

        I am having a great life here with what i earn here… thanks to your country for being so expensive…

  13. […] People in western countries have always scared people into thinking jobs and industries will be taken away by someone in Asia. It’s called Yellow Peril and I’ve pointed that out a few times before here and here. […]

  14. SH Lai says:

    That cost of living is being driving up a lot not by salary rise but by real estate bubble and in-balance in GDP (one percent-er getting more). This is a problem for a lot of developing countries.

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