Versus Outsourcing – Part IV
by Paolo on Jun.23, 2009, under Meanderings, News
I believe that the Technological Singularity is not near. Moore’s law has a plateau point and I believe that we are fast approaching it. It doesn’t matter if we can create computers with more processing power than all the brains on the planet if no one has any use for such a computer. The stopping point of Moore’s law is that if there is a market that needs that kind of power that can exceed the cost of creating the next generation.
Even now, the CEO of Ubisoft recently said that the next generation of game titles will cost and average of $60 million to make (and this is an estimate before hyper-inflation starts to hit the U.S. Economy.) Just how many people would have to purchase the game for over $60 for the producers to cover production cost, much less the cost of marketing and distribution?
One such way to cut down on costs is to outsource. However, outsourcing has serious issues and among them is that you cannot keep the price of talent down because of the demand. For instance, in the Philippines, one of the largest places for outsourcing talent, you are hard-pressed to finding a software architect or product manager with 10 years of experience. Why? Because they have moved out of the country. In fact, it is an initiative for the Philippines to create incentives to keeping talent within the country or to return to the country rather than have all of its talent move away for greener pastures.
What I had conjectured in a previous post is a solid fact of many third world countries. Talent simply leaves to go where they are paid more and live a better standard of living. Those who seek a “better standard of living” generally aim for living an average life in first-world neighborhoods than seeking a life as a king in a third-world neighborhood. This creates a “brain drain” effect where talent simply flees a developing country.
To the indie, this means an opportunity. There is going to be a substantial market gap in the next few years for inexpensive, innovative and outrageous games that only indies can provide.
June 23rd, 2009 on 2:51 am
I strongly agree that we are _not_ approaching a technological singularity. There are a number of authors and futurists promoting this idea, but truly, there is no reason to assume the rate of technological advancement will continue at this rate indefinitely.
Regarding outsourcing, why why do you think that an individual would rather live a middle class life in a first world country than a life of affluence in their home country? I would expect the opposite, in fact: that one would rather stay near one’s family and friends, living “as a king”.
June 23rd, 2009 on 10:47 am
Though I have pointed out the trend in some of the studies I linked to in the post, I can only speak anecdotally.
If I were to take the amount of money I make here in the United States, it is a massive amount of money compared to the living wage in the Philippines. But it wouldn’t be enough to make up the difference in what I would be giving up. That is because of the huge gap between the rich and the poor in the Philippines that there is very little “middle ground.” You have to be incredibly rich, even by Western standards, to truly live “as a king” in the Philippines.
In terms of the cost of living, food expenses, and hiring manual labor, those come dirt cheap. But real estate is still expensive, even in the Philippines, and especially in metropolitan areas where businesses thrive.
Even though my dollars would stretch farther in the Philippines, I don’t make enough to live in a decent condo in a decent neighborhood in Manila compared to my suburban house and yard here in the United States.