I work at a company which was a victim of a hostile take-over from the VC. An Indian-American who is part of the VC firm has taken the reigns as CEO and ejected the founder.
The first thing he did was lay-off dozens of technologists and outsource their roles to India. The software fell apart, the people sucked (I was in charge of managing a few, and it was in general an awful experience), and the customers started leaving in droves. Everything about our highly custom software requires rapid responses to customers. It's impossible when you have people, no matter what their skill level, 12 time-zones away.
The CEO back-pedaled, and brought Americans back on. Suddenly, the customers are coming back, and we are growing again. We were always profitable, but he doesn't like the margins. So now he has again tried the outsourcing strategy, but decided to open an office directly in Pune and have direct hires.
The customers are already, once again, suffering. A competitor who does zero out-sourcing is eating our lunch with new customers. (if not for a strict non-compete, I'd jump ship to them in a heart-beat.)
I'm leaving the company, because it sucks working for a CEO who is a poor leader and not creative enough to find ways to make money other than simply cutting costs. I've been here less than a year and have single-handedly built two pieces of new software that are in production with customers. It's been hard, because all of the knowledge has left. The people in India are completely disconnected from the customers.
Outsourcing makes sense to some degree if a company has a core job other than software, and IT is an employee facing role rather than customer facing, but only if it's a somewhat plug and play job that doesn't require lots of domain knowledge.
If you're a software company, and you want to compete, good luck.
My recommendation to anyone on this list:
If you find out that a potential employer outsources, know that this is a sign of someone who sacrifices employee and/or customer happiness to increase profits. This is also reflective of a company that doesn't know how to creatively boost profits in value-add ways.
My CEO has deluded himself into thinking he is adding value, because he can increase the number of technologists for each customer.
Perhaps most comical about the whole thing is that we are a small company with 50 employees, and there are more executives than US based technologists now. I'm looking forward to giving my 2 weeks notice, but not happy about what the impact is going to be on my customers.