A fine plan
But for the fact that as soon as a company starts hiring in a low wage economy, it starts to create the conditions that push up wages - experienced, educated staff (well, more so than before), creation of and demand for infrastructure, a more vibrant economy with other opportunities. The presence of a blue chip employer attracts other employers. So what was a great place to offshore (ie a great place to exploit low standards of living) starts to see rapidly rising wages and rising staff turnover. Wage inflation in Mumbai, for example, is projected to be 10% this year, against local CPI inflation around 3.5%.
The outsourcer then has three options:
1) tolerate the higher wage costs and staff churn, destroying the economics
2) Hire the cheap dross that nobody else will and tolerate even worse quality, angering customers
3) Move to somewhere else and start again - the most popular plan.
There's probably no point in the forseeable future that scumbag offshore employers will run out of places with cheap labour. But the continual need to move on, or start seeing those cost savings eroded make this a mugs game. Suddenly the long term "core competence" isn't running an ITO or BPO centre well, its finding the next bunch of yet-to-be-farmed natives, and building a new centre, migrating to that, then finding the next location etc etc. It's a mug's game, in which the winners are the most mendacious companies with the lowest standards.