That’s part of it, but not really the whole problem at all. Companies do consider wages when making outsourcing decisions, but the other costs of keeping full time employees are the real driver: Facilities, health benefits, incentive packages, 401k matching, insurance, taxes - these are the things that drive companies to outsource. If a company hires Xenoholic, Inc. to provide bodies, the onus shifts to them to provide all of that. The company can then grow or shrink workforce in an almost just-in-time fashion without having to pay unemployment or provide severance.
The advantage we have is that we lead the world in productivity and quality - these are the first things that suffer when a company decides they don’t need American workers anymore. Once quality declines, consumers will either keep buying crappy product and justify the decision, or they will go elsewhere and pay a little more for something better. Recent history suggests that consumers aren’t that bright making outsourcing a really good bet. Now that things are tight, maybe the buying public will be a little more discerning. If so, that’s good news for us.