Outsourcing from an American manager who's been there and done that
Heard on Ryze's Web Design & Hosting board (OUTSOURCING - Problems I experienced and some thoughts...):
People do it because it's cheap, and who doesn't want a great deal. With proper pre-planning, and project management we realized costs savings in the 15% - 30% range. If you just throw a project offshore, sure you can cut your costs in half, but you'll get what you pay for. And again, it is very hard to get offshore programmers with the contextual knowledge of your business. Things work better if you already have the higher level software architectures built and farm out the grunt work.