Another aspect is the accounting rules. When a company has direct employees working, they show up on a P+L statement in the labor section. When a company is "b

Another aspect is the accounting rules. When a company has direct employees working, they show up on a P+L statement in the labor section. When a company is "buying a service" from an outsourcer, staffed completely with H1B and offshore people, it gets treated differently and can be accounted for in a different section of the P+L. I believe this is enough for larger companies to see moving hundreds or thousands of jobs to this model for pure tax implications. Especially if they can "amortize" out the cost of building something by 3 years. This is in addition to the 1/3 to 1/4 cost. Change the accounting rules to make companies track H1B and outsourcers as labor and it may make some companies second guess this model. Nobody is mentioning quality either... since that doesn't show up in a spreadsheet or accounting system. The fact that your projects are taking longer and are buggier is more of a soft metric but definitely will impact the bottom line.