LogInWhen it comes to counting costs, outsourcing is usually considered less expensive than hiring a full-time employee. 80 Level conducted a study on the state of outsourcing in gamedev to get to the core of it.
Internal and external data have proven a general trend of outsourcing being cheaper and less time-consuming than hiring in-house. Let’s take a look at the hourly rates for outsourcing services in various regions worldwide and the cost structure for an outsourcer vs. an internal employee.
In 2024, the average hourly rate for outsourcing services is 50-100 USD per person (in Europe & the US). Here are the rates in the main outsourcing regions:
When deciding whether to hire an in-house specialist or delegate the work to a third-party agency, the company can estimate the budget by comparing the real cost of hiring an outsourcer vs. a full-time employee in a specific country.
It’s necessary to consider additional expenses to understand the actual cost of outsourcing. Toptal claims that the true cost of an outsourcer is 18% higher than just their hourly rate due to general and administrative expenses (legal fees, accounting fees, etc). What is more interesting is that the real cost of an internal specialist can be approximately 2 times higher than their hourly rate. In addition to general and administrative expenses, a company must pay fringe benefits (healthcare, paid time off, retirement contributions, etc.) and overhead (computer equipment, rent, hosting services, etc.), making outsourcing more cost-effective in some cases.
Besides, finding an external specialist can be less time-consuming than recruiting an employee. Depending on project specialization and complexity, it may take around 1-4 weeks on average to find an outsourcer, whereas employee recruitment time is usually closer to 40 days with additional potential expenses for a company.
While delegating some parts of game development to third-party agencies may be cost-efficient in some cases, in other cases, game companies may face quality control issues, miscommunication, misalignments with internal vision, and being highly dependent on outsourcers.
If you want to learn more about the biggest challenges game studios face during game production, the state and trends of the outsourcing market, and its influence on developing and publishing companies in 2024 — download our fresh research: Gamedev Report: Outsourcing vs. In-House!