not in my experience
I work with HCL, and in every case our inhouse team have had to do more work supporting the outsourced work, than we would have had to do to build the thing ourselves.
It's not about skills, as we've had to train the offshore teams. The only way it's cheaper, is on paper. in that you get a project manager, and offshore coordinator, and onshore coordinator and a developer, for the price of one developer. The actual productivity is less.
Somebody somewhere gets to say i have a team of 200 people offshore, for the same price as 20 inhouse developers, no-one ever ties back that you probably could do the same work, to a higher standard with the 20 inhouse developers.
I continue to maintain, that offshore outsourcing, just isn't cost effective. You have the language barrier - yes everyone speaks english, but not fluently. pidgin English code comments and design documents are a nightmare to unpick. Also, your carefully worded spec, may or may not be understood in the same way as you intended.
You have cultural differences, ties back to language, but this is a biggie, this is one we rub up against constantly, it manifests to us as no-one using any initiative whatsoever, you get exactly what you ask for without question or consideration that it will do what it's supposed to.
Things work differently within companies too, we never seem to work with the same group of peopel twice, so every project is a training excercise on our part. We train up a team of developers, just get the code up to a standard we can accept and the project ends, next project, rinse and repeat with a new team.
You have the simple timezone differences, which means a 5 min email back and forth can take a week due to people working at different times. Having no physical presence is also more problematic than you'd expect in IT, being able to get everyone sat around a table together, to go through designs is invaluable. Sharepoint isn't a substitute!
One of the problems we've had, is that we aren't allowed to tell the people higher up the problems we've had. It can be a train wreck from start to finish, we step in and pull a project out of the gutter at the last minute, as we'd take the fall if it failed, and that gets reported through as "<offshorer of choice> did a great job in getting that last project implemented, lets use them again for the next one"