It's an accepted reality today that when one uses the term "Hollywood blockbuster" to describe a VFX-filled or animated cinematic tour de force, they could be referring to a film where a significant portion of the computer wizardry was done in Mumbai or Singapore. While a combination of tax incentives and talent brought increasing amounts of big-budget film work to the UK, Australia and New Zealand, developments in technology and increasingly skilled yet comparatively cheap workforces have now made international talent centers out of Taipei and Bangkok, among many other cities.

Commercial production underwent a similar offshore boom in the wake of the Screen Actors Guild strike of 2000, when agencies and American production companies traversed the globe in search of cost-effective crews, talent and locations. Just as those bottom-line considerations effectively launched the production service industry, they're also coming into play in the creation of VFX and animation for spots. Western companies are turning to opening offshore subsidiaries, outsourcing and other methods to harness the wealth of talent and remain globally competitive.

"With globalization you're seeing companies pop up in other parts of the world that are doing high-quality work," says Ed Ulbrich, EP and president of the commercial division at Santa Monica's Digital Domain. "So if you're a global advertiser you're aware of that - it's cheaper to work in Asia or Canada or Latin America than it is in the US."

Ulbrich, part of one of the largest "digital image factories" in the world, sees increased participation from offshore VFX/animation talent for Western spots as an imminent reality. He cites the costs of labor and equipment as the main drivers, and while he says it can be argued that "the cost of capital expenditures is pretty much universal", labor is a different story, with salaries for offshore workers often coming in at a fraction of their Western counterparts.

"Agencies begin to get pressure from global clients, where the clients are saying, 'Our spend is what it is, and your job is to figure out how to get us quality for that amount of money, and don't come back for more'," he says. "So it becomes very difficult for US companies to compete globally because of the cost of business here."

MAKING MOVES
Rhythm and Hues, an animation and VFX shop originally based solely in Los Angeles, made the global move in 2001 when they opened a facility in Mumbai. "About 10 years ago, we sat down to discuss the future of our industry and tried to make some predictions so that we could better prepare ourselves as a company," says Prashant Babu Buyyala, international head of operations for Rhythm & Hues and managing director of R&H, India. "One of the clear trends that we all recognized at that time was that our industry was becoming more and more global." Even in the LA office, close to 50% of its talent was international. Also, new potential markets in India, with the Bollywood explosion, and China meant that focussing on Hollywood production was "short-sighted".

Thinking they could "emulate the success in the IT industry in outsourcing", R&H initially sought to find companies in various countries that it could outsource work to. "Lots of potential partners talked about 'high quality work' but we had a tough time finding companies that could deliver to our expectations," explains Buyyala. "Also, many companies left a lot to be desired with regard to how they treated their employees."

In the end, R&H opted to go "the harder route" and started a new facility in India, a territory that offered an established film industry, a "globally competitive cost of living and salary structures" and an English-speaking workforce at the ready. Originally, the R&H, India teams worked on subsets of overall projects, such as compositing, but now Buyyala reports, "R&H, India works on all the stages of the animation and VFX pipeline from beginning to final delivery." The facility received an Oscar for its work on The Golden Compass and has also worked on The Chronicles of Narnia: The Lion, the Witch and the Wardrobe, The Incredible Hulk and, most recently, The Mummy III. R&H, India has also recently opened a second studio in Hyderabad.

INVESTING IN OUTSOURCING
While the talent and cost savings available in outsourcing to emergent hubs like Mumbai has proven itself in the motion picture realm, Western shops repeatedly cite time and management issues as stumbling blocks to transferring that success to the commercial realm. "With films you have enormously long production schedules - 18 months, 24 months - relative to a commercial," says Ulbrich. "You have the time to invest in building compatible, interoperable pipelines between facilities around the world, dealing with the connectivity issues, infrastructure and communication, and language and cultural issues." The commercial production process, by contrast, requires close client involvement. "And you have six weeks to turn it around," adds Ulbrich.

"I understand the cost implications of moving to a place that would provide high-quality talent at much lower costs," says Framestore, New York president Jon Collins. "But the key missing component for us is the bridge between what the client wants and what we can deliver. It's the ability to efficiently run the project." Still, Collins says the company is interested in tapping into global talent and markets. For Framestore, the most effective way of doing that is with what Collins calls "internal outsourcing."

"For example, we've often used guys who've been with us and that we've helped develop, but because of lifestyle, they've wanted to move somewhere else," he says. "So they set up [where they move] on the basis that we will use them for overflow work, like modeling or texturing, and in some cases for animation. It's a form of internal outsourcing, which means we're still communicating directly with the client." Framestore has recently established an outpost in Reykjavik, Iceland after an employee from the London office moved there and touched base with some local talent for overflow work and Iceland-based projects.

Ulbrich says that while Digital Domain has been outsourcing motion picture work, it's now making forays into outsourcing commercial tasks. He calls the process "terrifying, because there's no time to get it wrong." But it's an undertaking the studio has embarked upon carefully. First, due diligence is taken to understand the infrastructure as well as the software and hardware pipelines of the foreign facilities with which it works. Also, in the handful of times when the studio has worked with talent in Thailand or Asia, "we've let [offshore teams] do shots and work on a project while there's another team in Venice, California doing the same work. It's an investment more than anything else, in seeing if this can work on a commercial schedule." Ulbrich says in each instance, the work done by the offshore team was used in the final spot.

"You can count on three fingers the numbers of time we've tried this," he says. "I don't want to call it experimenting, though, because I think it is the future."

MAKING IT WORKM
When ATTIK, San Francisco wanted to repurpose running footage for a new Scion spot, it turned to two VFX and graphics companies - Pi in Santa Monica and Trango Interactive in Islamabad - to create CG animation and VFX for the spot. As Trango had proved its animation capabilities with interactive work done for the client, they seemed like a natural choice for the work in "Arrows", in which giant CG arrows follow a Scion on a night drive. And, says head of broadcast production Michele Morris, while the cost savings were a key factor, dealing with the offshore shop wasn't particularly cumbersome, even with a tight turnaround.

"We'd had experience working with them on other projects so it made it easier for us to go one step further and try the TV world," she says. Although working with large, HD-ready files can be hard with different systems, Morris says it was an experience she'd repeat.

R&H, India's Buyyala says that while the company's work over the past six years has been primarily in the feature realm, "we've also worked on a handful of TV commercials as part of the R&H team". He says the company is looking for ways to effectively integrate the 230 employees of the Mumbai and Hyderabad offices into more commercial-making with the US office, but he doesn't view it as outsourcing.

"The fundamental difference between what we are doing and what a typical outsourcing model does is that we are all part of the same team with the same common goal," he says. "We are all working on the same tasks and have a collective responsibility to deliver the overall project."

He also cautions against the perception that work done in India will automatically shave bits off the budget. "Salaries in India are roughly one quarter of those in Los Angeles," he says. "However, that doesn't necessarily translate into similar overall cost savings on productions." He cites overhead, infrastructure expenses and the R&D workflow processes necessary for running a distributed production pipeline as adding to costs. But that attention to integrating and blending their operations between offices has, according to Buyyala, given them a competitive edge.

It's that edge that VFX and animation companies around the world strive for, and as technological advances and strong yet comparatively inexpensive talent drive global collaboration on projects, Ulbrich says Western companies ignoring utilizing offshore resources do so at their peril.

"It's happened and continues to happen in a very aggressive way in the motion picture and animation industries, and so anyone who doesn't think this is an ingrained reality in the world we live in is in deep denial of the facts," he maintains. "All the indications are that it will be an absolute necessity to remain viable in the Western world of marketing."

ATTIK http://www.attik.com
Digital Domain http://www.digitaldomain.com
Framestore http://www.framestore-cfc.com
Pi http://www.cakeshop.tv
Rhythm & Hues http://www.rhythm.com
Trango Interactive http://www.itrango.com