Offshoring might frequently be a disaster. On the other hand, Microsoft and the rest of FAANG and other large tech companies have had overseas development centers staffed by full fledged FTEs for many years now with, as far as anyone can tell, success. Unfortunately, there doesn't seem to be any reason they couldn't expand those.

I'm not sure if it actually is working out, or if the companies outsourcing are just absorbing the inefficiency.

Every outsourcing effort I have seen at some of these massive companies has been pretty tragic, where the best that can be said is now there is a shit but cheap option to be used where the quality doesn't matter.

This gets repeated across all the entrenched players simultaneously, while the product quality stagnates or declines (but the stock goes up).

I'm guessing that there is a difference between "offshoring, while still having the offshore people picked and employed by you" (let's call it "pure offshoring") and "offshoring and outsourcing to a local company" (let's call it "outsourcing to offshore").

With pure offshoring, you do have control over who you pick, what their mode of work is, whom to fire, etc.

With outsourcing to offshore, the local company hires people, usually on the cheap, to only just fullfill your contract and no more. If people underperform, you may complain, and maybe they'll be moved to a less prominent and visible role, or maybe they'll be shuffled to the next customer of theirs. So things will be bad, because it is not in the interest of the local company to do one iota more than necessary. And you'll still have to have your own QA, architects, etc., to make sure you at least get what you paid for.

when most of the people offshore are employees it can work. The biggest thing is you need to start with good managers there who hire good people. In india good engineers are paid more than their peers in germany, but that is the price you pay for the quality you need for good people. If you don't hire good people you can get plenty of terrible people for really cheap, but the results will be poor quality. Take your pick.

Yeah that's why it's called a multinational. Offices everywhere. And yes it's a success.