I used to think that communication, culture, and face-to-face interaction were the important factors in why offshoring has failed.
But now I think it has more to do with the quality of services. Not that Indian or Chinese (or whatever) testers are inferior, but apart from the cultural and communication problems, and despite the domain knowledge gap, the problem is really that offshoring as a strategy is flawed.
The idea that providing warm bodies to fill chairs in a cheaper location is a solution to quality costs is erronious. You’d have the same quality control problems if you outsourced a key component of your business to Arkansas (or Wales).
The act of delegating tasks to someone whose priorities are not your own is the fatal flaw. They are incentivized to produce numbers at low cost. That’s the core problem — on top on any other problems inherent with remote teams in general.
But, remote teams — even distributed teams — can succeed if they are critical stakeholders in the business and not merely vendors. A distributed team can take advantage of the best talent wherever it is, not just in London (or Silicon Valley.)
Vendors, on the other hand, should provide a clear product or service, not be a part of your business strategy. And quality should be an important part of your business strategy.
Vendors are by nature a centralized entity with their own quality and business concerns. That’s not to say you can’t find a high quality “quality” vendor, but I don’t see how it works for the typical use case.
Of course, take my spiel with a grain of salt. I’m a tester who works remotely and a consultant who helps build distributed teams, so I may be biased, but I believe in what I’m selling.