Yeah, no kidding. It’s the kiss of death for most software companies.
Just ask 4-Windows-10-failed-updates-in-a-row Microsoft how well it has worked out for them
However, the economics of outsourcing are far less straightforward than the labor rates comparison suggests. There really is no such thing as “labor arbitrage” in software development. Unlike copper or wheat, all developers are not created equal, so you are not exactly trading commodities. Furthermore, outsourcing is definitely not without risk, as discussed below. So the concept of arbitrage doesn’t apply, and with it goes the whole proposition”.