Although his comments are accurate there's nothing terrible profound about them.

For quite a while everybody has realized that out sourcing was never anything more than labour cost arbitrage, dressed up with fairly empty "sales" rhetoric.

However he misses a more fundamental way in which clients and outsourcers interest are misaligned. Because outsourcers are essentially selling bodies they have no incentive to become more efficient through labour cost reduction.

I suspect this failure is the real reason for the current "in sourcing" vogue. As software development and delivery becomes increasingly automated the labour cost component will drop, along with the pressure to outsource.

The outsourcers business model is fundamentally broken and it's only a matter of time before this shows up in the bottom line.