"To do it right, it cost as much as onshore development. Outsourcing should be used to find quality people, as they are always in short supply, and not for cost

"To do it right, it cost as much as onshore development. Outsourcing should be used to find quality people, as they are always in short supply, and not for cost cutting, because the reality is that it is not cheaper." This isn't quite true in my experience. You are absolutely right in saying that finding good people should be the primary focus of outsourcing but the fact remains that the cost of living for even a very good person varies quite bit across the world. I have lived in both the United States and in India, and I would charge significantly different rates if I were to take up an outsourcing project today from Bangalore vs from California, say. I know peopel who are outsourcing high quality Ruby On Rails work at 35-50$ hour to small teams of ex ThoughtWorkers (due disclosure: some of my ex colleagues) in Bangalore, who are very very good at what they do (just to give a specific example). They deliberately avoid bottom-of-the-barrel rates, but I'd be very surprised if even those rates were viable in San Fransisco. (Just to be clear I have no intention of doing this kind of work ever again - most outsourced work happens to be crap maintenance-of-terrible-codebases/braindead-cookie-cutter-work people in the West don't want to do. Cleaning up muck gets old very very fast)