Costly Lessons In Outsourcing?

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.

Soldier On.

4 Responses to Costly Lessons In Outsourcing?

  1. anon says:

    It’s only costly for people trying to pay for a first world cost of living in the long term with their sweat and IP…
    http://www.2-popforums.com/forums/showthread.php?t=119825
    Yesterday, 07:27 AM mpcrecruitment
    Outsource Manager @ MPC London
    Position Summary:
    MPC Film are looking for a strong production manager to handle the overview of work between its London, Vancouver and Bangalore sites. This person needs to have a strong VFX background with a firm understanding of Matchmove/Rotoanimation, and Rotoscope/PaintPrep disciplines. They also need to be willing to travel at short notice.
    Position based at London site.
    Duties and Responsibilities:
    · Involvement with in house departments in regards to ensuring workload facilitated to vendors.
    · Ability to forecast workload and predict potential shortfalls with current MPC vendors in order to take necessary action to ensure work gets done
    · Regular interaction with Show Producers / Production Managers regarding workload and vendors
    · Aid with future growth planning for MPC Bangalore regarding resource/systems
    · Strong relationship building with current MPC vendors and establishing relationships with potential 3rd party vendors
    Experience, Skills and Abilities Required at Minimum:
    · Highly organised, first-class time management skills
    · Excellent communication skills
    · Good understanding of Sinecync, FTP, Aspera and other common online delivery and review tools
    · Good understanding of common digital image file formats and resolutions
    · Proven ability to prioritise conflicting tasks
    · Ability to remain calm and confident in a fast-paced environment
    · Ability to work within a creative team towards a common goal
    · Good knowledge of MS Office packages (incl Excel, Word and Project)
    · Preferably an understanding of Filemaker software
    · Open to learning new production tools.

    • Vfxartist says:

      That ad sounds like a job for three people, is probably salaried, which means the actual hourly pay for that job is very low.

      Also remember, the slack in management of outsourcing, in slopping planning, and inexperienced and/or understaffed management is usually absorbed by the artist in the form of long hours. This is worsend by companies that don’t pay overtime, and this knows no boundary, as it happens in vfx shops in first world as well as in third world countries. In any part if the world, it serves as a devaluing of the business.

      Outsourcing sounds great at business parties when MBA’s love to chat about how clever they are. Few are ever around to see the rotted fruits of their lack of labor. Its a speculation part if business thats more a belief system than an actual mechanism if business.

      As you can see from a company as supposedly high tech as Boeing, the practicality of finding experienced vendors escaped them. The reality of the reliability of precise, high stress load components to be reliably built in a vacuum of knowledge of the rest of the aircraft, and expecting it to just fit is like casino betting. Also the culture of where these outside vendors operate, as well as labor practices, that alone can affect the output of the product. Then theres the reputation of the outside vendor… many of these never built such a component, nor did they ever work at such precise tolerances. How can all of this be overlooked in a product who’s reliability is literally a life or death situation?

      Because its an abstract, not a functioning model of business, in a culture where the profit is the product, not the actual plane. No one ever died from a bad visual effect movie, but an airplane?

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