That's certainly part of it. But the other part that I've heard time and time again is that in order for outsourcing to be successful you basically needed an american engineer in the mix hand holding everything, clarifying requirements, and vetoing bad code.

That part of dev work, the requirements gathering, attention to details, clarifying requirements, is something AI also struggles with. A lot of companies basically waste time and money on outsourced devs because without a clear path forward they effectively will sit and do nothing, waiting for a prompt.

I think the mechanism here isn't that American engineers are magic. It's that you need that contextual knowledge really close to where the work is actually being done, so that the turnaround for questions, blockages, clarifications, "we've got no work to do", quality level-setting and so on is on the scale of minutes, not time-zones.

I would not agree on that point. It really depends on company's structure. I mean it also depends with people that makes the team. I would say there are a lot of unknowns but I would certainly not generalize.

How I find your argument is that one distinguished engineer from US could do the same with the use of AI.

I worked with both and I know great and bad engineers from both sides. Only thing is that US has a bigger pool of great engineers.