Cracks are appearing in the offshore sidewalk where IT jobs travel from developed countries to places such as India and Costa Rica. There is a plethora of problems that can offset or erase the cost savings of offshoring.

First, offshoring often results in lower customer satisfaction. Outsourcing firms will brag that their employees have excellent English skills, but the reality is often different. The resulting customer dissatisfaction can lead to fewer sales and lost accounts. Language is not just a call center issue; programmers and engineers also have to communicate complicated concepts to their U.S. counterparts and customers.

Quality of service also can be lower. My husband knows this well. He has used and recommended Dell computers for years. Calling for service used to be a decent experience. However, when Dell switched to an overseas call center, his requests for help went from a 5-minute debugging session with an experienced techie, to a painful half-hour or more waiting patiently while someone read through a script of questions. His loyalty to Dell is seriously eroded.

Two years ago, Everdream, an IT services provider in Fremont, Calif., shifted some of its work to Costa Rica, expecting to reduce its call center expenses by 25%. Instead, problems that should have taken 5 minutes to solve were taking an hour. Promises to call customers back went unfulfilled. Everdream also found that it took twice the number of workers in Costa Rica to handle the same tasks that were done in the U.S. Cost savings and quality of service suffered; productivity was worse.

Today, Everdream has phased out its Costa Rica operation and reopened its U.S. centers.

The New York Times recently reported on the experience of Bladelogic, a U.S. designer of network management software. In the story, Bladelogic CEO Dev Ittycheria said, "The cost savings in India were three to one, but the difference in productivity was six to one."

Indian entrepreneur Arun Shastry, founder, CEO and CTO of TotalETL, a data integration firm in Westford, Mass., also pulled the plug on overseas development. Shastry cited lack of employee experience, poor code quality and lack of IT project disciplines, such as design, documentation and project management, as some of the reasons for failure.