Tapan Mukerji's World
Generally, outsourcing most of the times tends to be related to cost saving. Well, this may be one part of the story but not the single driver. Basically, one goes to outsource when it is not possible to accomplish the same way in-house. So this may be cost, technology, time lines or whatever.
With our experience of handling various projects from offshore, we have seen engineering outsourcing is also interpreted most of the times as drafting assignments. Equally untrue is this interpretation!
There are many areas like design, analysis, project management where the customer simply may not have the expertise. Recently, we did a finite element analysis of a complicated configuration for a large manufacturing US organization. It is interesting to note that the organization had been manufacturing the same product for 20 years but when it came to performing a finite element analysis, they had to outsource offshore.
In this case demand for technology prevailed over everything else. So offshore companies are not solely meant for labor intensive functions - many of them have highly specialized technology skill to offer.