I was having a conversation with someone who believed that components of a games code where subcontracted out to programmers in different countries where it would be cheaper, then assembled by the local company. I understand that people often use pre-built engines but I would think that making the actual game would require people to work closely in the same studio.
I couldn't find much clear information on this when I looked, does anyone know?
It happens. They are still "companies" so any kind of business move can be possible, including paying some foreigners to do a module of the game.
A recent famous example are the boss fights in Deus Ex : Human Revolution. They were made by another company than the Eidos team.
However, it is not common in the gaming industry, because it's harder to maintain coherency with a lot of people that are foreign to the core team. It happens mostly on very big projects where outsourcing graphics is not a problem for example, or outsourcing some modules like graphic rendering.
Yes, in some companies subcontracting is very common. Particularly in Japan. Tose does contract work for an unbelievable number of companies - some Japanese studios consist only of concept artists and designers. Mistwalker outsources almost their entire engineering process.
From Gamasutra's Interview: Tose: Game Development Ninjas:
GS: How many people do you employ?
MA: 800 in Japan, 200 in china.
GS: How come we've never heard of you until right now?
Koichi Sawada: Well we're based in Kyoto, right? So we're ninja. You can't find us! But in the past 26 years we've worked on 1,100 games. Including partial games.
...
GS: Do you have a breakdown of what percentage of your staff does what?
SC: Our Chinese operation has a higher percentage of partial work, whereas the Japanese studios do more full development. Companies come to us if they need models, or maybe some animation. Right now, we're also making all of our artists in China hybrid artists. Which means they can do both 2D and 3D, so that at the end of the year, every artist should be able to do 3D art.
GS: How many dedicated 2D artists do you still have in China at this point?
SC: Maybe about 40.
GS: In Japan what are the majority? Programmers?
MA: Programmers and artists.
From Return Of The Ninja: Tose's Stealthy Outsourcing Progress:
How many developers are working at Tose, now that you've opened more studios?
It's 1,000 in Japan, 200 in China, and two in the U.S.
...
Are there any plans to do any more original IP out of Tose in the near future?
We already make original games for publishers, but we will not own the IP of that project.
Will it be based on ideas generated from Tose, or from the publisher?
From both. It depends on the project.
Note that Tose isn't doing mobile and web games, for which outsourcing is well-known - they're doing A to AAA games, sometimes the entire game, and having the publisher take credit for it.
It does happen, though it's rare that it is done to save costs by outsourcing to cheaper countries, as with business software. In games it is usually one of the following:
I've seen cases when art assets were contracted out to companies on the Indian subcontinent, and heard of them being outsourced to China too. But I've never heard of part of the game code being contracted out like that - I think game code is considered a core competency of game developers and when you start subcontracting your supposed core competency to a cheaper place, that would indicate that you have some problems with your whole business.
