[gvb]

As others in this discussion have noted, there is a lot of churn in engineers at outsourcing shops, so the "start up" costs are forever.

The outsourcing engineers I have worked with have been smart, but inexperienced. [edit] The ones I didn't work with were smart, experienced, and substantially more expensive.

My gross extrapolation from my limited experience with outsourcing is that the engineers gain experience, but that experience makes them more valuable. Since they are smart, they use the outsourcing shop experience as a springboard into a better job, probably not in the outsourcing business or in a "higher up the food chain" (and thus more expensive) outsourcing shop.

Outsourcing is like having a perpetual intern program - all the training costs but never getting the benefit of that training with a long term employee.