The preconception is that internal test teams have a lower cost than outsourcing. The multinational companies calculate the hourly costs per project and might ignore productivity, dead times, additional personnel cost, hiring costs and many more.
So, let’s do a small calculation considering a hypothetical simple situation, considering only functionality testing (for a better and short follow-up of the story, watch the picture attached):
A company needs to release a game in November and estimates that they will need 4 testers in March, 10 in April and full team of 20 people from May through September for a total of 114 man months or 19.380 total test hours. The internal test cost is calculated at 6 Euros per tester per hour for a team of intermediate average seniority which gives a total of 116.280 Euros Test Budget. We don’t count the difficulty of building such a team from scratch.
The HR is announced that they need to recruit these testers so they allocate 1 HR specialist full time for the months of February to May. Total cost of the Hr responsible is 2000 Euros per month which gives a 8000 Euros company cost which includes also hiring channels. We don’t count other expenses which inevitable will appear.
The game has a delay of 2 month but decides to keep the staffing plan for testing as the hiring is on schedule and consider they can recover the delay. That means that the 14 men months (2380 men hours) would have not been necessary but they are forming up as a team and wait for builds.
So, in May, there are 20 testers working on a build that require only 10 testers, which means 1700 men hours. The delay is recovered by cutting content from the game and the dev team is back on schedule. Cutting content means that only 16 testers would be necessary but the decision makers do not know that and the Test leaders want the man power for other changes. This means that 16 men months could have been spared (2720 men hours).
So, total testing cost remains 116.280 Euros (Testers) + 8000 Euros (HR) = 124.280 Euros Total Internal cost.
On the same scenario, consider an outsourcing company with a cost almost 75% higher of 10 Euros per tester per hour for an intermediate seniority team.
Initially there were 19.380 total test hours which gives an estimated budget of 193.800 Euros. The change of plans could have saved the company 2380 hours in March and April, 1700 in May, 2720 from June to September which gives a total of 6800 hours. The outsourcing team will not charge when not testing so 68.000 Euros will be decreased from the testing budget.
This gives a total budget of 125.800 Euros outsourcing versus 124.280 Euros internal.
Advice: If there are no modifications in planning for a project, internal test teams have lower cost. For any modification of the planning, internal staffing needs to be managed carefully and this brings high costs. For flexible planning, schedule modification, low follow-up chose an outsourcing test team. We will be happy to do a test for you.