One of the engagement model choices for outsourcing your software development I have described in the past is the Body Shop. Another name used by Reza Imam in his recent article is Software Sweatshop!
The problem is in most cases, you don’t need just bodies (sweating or dry) to develop your software offshore. You need a team that can work together well to get the job done. The reason the body and sweat shop fees are so low is they don’t invest in a good recruiting process or effective software development methodology.