I've seen offshoring first hand through a previous job, it was a total disaster however getting anyone from management to admit as much was impossible.
Firstly, a lot of the really good people from cheaper countries emigrate to Europe, North America, Singspore etc. where they can earn more money. So, in choosing to offshore, away any company is missing out on some of the best people from the country they're offshoring to.
Secondly, the offshoring "partner" (i.e. consultancy firm) had a name beginning with an "I". A family member who works for one of the better consultancy firms turned the air blue when he heard their name.
A lot of offshoring firms start by putting good* people in placed for about three months, then replace the. with people who can't string a sentence together in English.
All of this is before face culture, corruption and other nasties, if the offshore bods make a hash out of things, don't expect them to admit it or tell you what went wrong so it can be fixed. A lot of them have fake qualifications too, so don't expect them to know what they're doing.
Offshoring tends to be preceded by voluntary redundancy, a lot of people who put their name forward do so because they'll have no problem getting a job elsewhere, or because they fancy an early retirement. Where I was, there were people practically begging for voluntary each time it came up most of them had done 25 years plus which would have meant in most cases a six-figure pay off.
As it turned out, in the end a few managers seemed to begin to realise it wasn't working. So they bought in a UK consultancy firm to run some projects at company locations in the UK. They ended up paying over £500/day for grads straight out of uni who needed somewhere to cut their teeth. Paying to train another company's staff, you couldn't make it up.
Unsurprisingly, there were some high-profile IT cock-ups...
*When I say "good", I mean distinctly average and that's just their language ability...