tl;dr: outsourcing doesn't work anymore because the salaries in third world countries are way higher than what it used to be
The truth is Outsourcing never worked. But it was cheap enough that it could have been considered a worthwhile attempt at cutting cost, even if it ended up costing more with re-writes it was justifiable.
Now, you can't justify even attempting it given the high risk of failure.
Perhaps outsourcing and employment do work, but it's always better to hand the job to somebody from local culture or to your friend/family. At a higher price, though.
Perhaps building a more robust reputation systems is a true way to get a more efficient economy.