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Pure trash. I have known a company to put out 3M in product development in India and get no more than they would have done with local software engineers.

If you really want to know what the problem is, it is poor company management. Managers who are not qualified in their position to make the decisions necessary to get the job done. Not knowing who to hire or fire, not knowing what is going on under their watch, not knowing what is ultimatly going to make the company fail and how to fix it. You can see it very clearly if you look at a sucessful company vs. a poorly managed one. If the leadership is unqualified and uninformed, then everything underneath will likely also fail.

Regarding outsourcing, do what is right for your company -- don't follow a fad.