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Why do you think the outsourcing never got quite as bad as everyone expected?

Communications is a big factor: if you can’t make good software in house, adding a time delay and lack of business knowledge won’t help.

The savings are almost always overstated by a huge margin: people with equivalent skills charge more or move. Most of the sales pitches assumed you’d get good results at, say, 20% but don’t work when that’s really 85%.

You get what you pay for, high quality code costs money and off shore talent will generally immigrate to first world countries if they have the talent cause of wage suppression abroad for the same skillset. My 2 cents

I think the other commenter is probably closer to accuracy. Here in NYC, offshoring to Chile/DR and other countries in the same timezone is surprisingly popular, even for early stage startups. The idea that people will just immigrate is a bit of a stretch. Coming from an immigrant family I will tell you that some of the most talented people stayed behind while others got lucky. My $0.02, just like anyone else's, and I know people currently in India launching really great code schools, but the talent argument never held in my mind.

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