At my current company we've tried one offshore outsourcing of a single development project because it would "save money" not to mention deliver the project faster, and it would work better, and require less management time to implement, and make our mouth fresher... Anyway, it was an unmitigated disaster. It ran longer than the original in-house programming estimates. Cost WAY more than it would have, didn't work right, at all, at any step in the process, took more time from the management team than they've ever had to give to the in-house projects, and I never got that full minty-fresh feeling.

I have to say, I was very nervous leading into the experiment, but it failed so badly that the nervousness just went away, along with the outsourcing company. BTW, we successfully rewrote the app in less time than our initial estimates.