Offshoring/Outsourcing Apocalypse - Hindsight

Gartner in 2005 published an interesting article on 5 reasons why offshoring/outsourcing will go bust:
1. Unrealized cost saving: Quick withdrawal or rebidding of offshore services resulting in inability of clients to recoup the initial transition investment.
2. Loss of productivity: Long learning curves involved in some complex tasks leading to initial loss of productivity at service providers end.
3. Poor commitment and communications: Withdrawal of key mgmt team shortly after service stabilization and lack of internal communications on the stakeholders expectations for the deal.
4. Cultural differences: Between the offshored suppliers and the clients leading to poor satisfaction
5. Lack of offshoring expertise or readiness at client end.

It might have been interesting to have the benefit of hindsight and interesting to see how the industry handled these "supposedly" silver bullets for offshoring failures.

Now all the above in 2008 maybe passe! as one sees a clear trend emerging where outsourcing done over 3-5-7 year cycle with a clear goals for transformation/productivity gains in the range of 20-30%, Fixed price bidding for non-discretionary service coupled with clear SLA baselines and performance gaurantees laid in place to avoid perceived productivity loss, attrition KPIs and matured governance structures balancing the challenges on commitment/communication, cultural flattening of the world enabling ppl to work across seamlessly, and the best practices/reference visits by clients to catch-up fast on the expertise and readiness gaps for offshoring.

Here are some of the brass talks/hypothesis if you will on why some offshoring projects may still fail:
1. Too much delegation of risks (performance gaurantees thru'stringent SLAs) and costs (lowering pyramids and costs) to suppliers by clients leading to inability of service provider to sustain service provision to client. (meaning suppliers going underground bending their back on clients demand)
2. High volatility on underlying economic factors imparing the realized benefits of offshoring: Exchange rate fluctuations, Wage inflation, etc.
3. Talent sedimentation and crunch: Challenges in getting the right talent, with right skills/experiences at right-time coupled with trying to get more down from resources lower down on the pyramid.
4. Eroding Service differntiation and increasing commoditization of business clouding the ability of the ability to choose the right partner for offshoring based on capabilities. Client will end up choosing a service provide purely on marketing/sales pitch then on their capabilities to deliver flawlessly
5. Others: I dont know......

What are your thoughts?