this bending rules and getting around regulations by off-shoring is rightly going to bite them
Skipness - why do you make this assertion ?
The normal approach taken in offshoring, is to try to offshore more and more of your staff until customers start protesting in a big way, at which point you put out a press release saying "We're listening to the customer and lessons are being learned". You then move a few critical functions back onshore while moving other bits that you hadn't yet thought of offshore.
I don't like offshoring, but in many cases it's difficult to argue with the economic logic.