Mega aircraft corporation Boeing made an outsourcing boo boo as reported in the LA Times:
“We gave work to people that had never really done this kind of technology before, and then we didn’t provide the oversight that was necessary,” Jim Albaugh, the company’s commercial aviation chief, told business students at Seattle University last month. “In hindsight, we spent a lot more money in trying to recover than we ever would have spent if we tried to keep many of the key technologies closer to Boeing. The pendulum swung too far.”
For those who cry that the end of the world is coming because of outsourcing you might be inclined to read the article as it may be pertinent to what the VFX industry is going through.
Nobel Prize winning economist Paul Krugman points out that these incidents happen so often in business and economics that it has led to a Nobel Prize winning theory on why so many companies grow to the likes of Boeing:
when the tasks that need to be done are complex, so that you can’t fully specify what people should do in advance, there can be a lot of slippage and strategic behavior if you rely on market incentives; in such cases it can be better to do these things in-house, so that you can simply tell people to do something a particular way or to change their behavior.
Sounds a lot like the VFX industry doesn’t it? Boeing is building complex airplanes and outsourcing much of that. VFX facilities build complex effects which is being outsourced in some cases. Yet in Boeing’s case, the vendors had a blueprint. Our industry doesn’t do blueprints.
Bids are won with some complex understanding that we’ll make something look cool for the clients. Rarely does that end well. I hear so many stories of vendors failing, increased overhead to manage the lumbering parts, and local artists being crewed just to clean up bad vendor work. At some point you have to wonder: “Do the execs ever take a look at how much more this is costing them?”
If you take a look at the animation, games, and vfx industry, the most successful companies seem to be the ones who engage in less outsourcing than their competitors. Pixar, Dreamworks, Blizzard, Weta. These are companies that tend not to chop their work up and see who else can do it. They keep it in house and under direct supervision for a successful product.
By the way, I thought I’d give an honorable mention to the only group in the article sounding the alarm of the feasibility of outsourcing the Boeing airplane: The unions.