"The biggest flaw that businesses do in this situation is believe in that the quality of the product will continue to outweigh the cost difference. It won't. ;/"
Do you count the loss in sales as cost? Or time to rework something? Sometimes it's hard to figure out if there's going to be a correlation before you do it.
About 10 years ago, we tried to do most of our work offshore. Company said they could hire 5 engineers for the price of one here in the states. We started looking overpaid and I'm sure the managers thought we were. It didn't last long. We still offshore, but it's much more strategic.