Same with a lot of other businesses, I used to work in IT in banking and if you don't have the systems working properly you don't have a bank. Senior management took a long time to get their head round that one, by then it was too late because the offshoring had gone too far.
One of the massive problems with offshoring is the concept of face, I had people lie to me about the completion of test cases so that they could try and mark a testing cycle as "complete" rather than request additional time/staff. No doubt the recent situation would have been exacerbated by "face" if offshore/transferee folk were involved, the problem wouldn't likely have been acknowledged until it was far, far too late to mitigate the developing situation.
Thankfully I left IT for something which would be really difficult to offshore.