China in 2000 and China in 2021 is like night and day in terms of standard of living, education etc. Just because it didn't work back then doesn't mean it wont work today.
Turns out cultural differences around work, communication, etc between the US and India/China are pretty massive. I seriously doubt that these went away in 2 decades.
Also, your argument around standard of living and education would actually be more proof that outsourcing would not work. It is no longer as financially beneficial.
That being said, you're also right, past failure doesn't mean that it can't ever be successful in the future.
What about France? Minimal cultural differences, and you still get massive savings when it comes to paying salaries.
That being said, yes there are other options. Eastern Europe is more and more popular for outsourcing, so is South America. Honestly, I'm maybe dead wrong but when I compare the mentality two decades ago (ie let's minimize cost by any means, who cares who writes the code? it's just code) and today, I truly see an equivalent to the "not invented here" syndrome.
Unless I'm wrong somewhere
A $100k salary in the US also means the employer is paying $7650 in payroll taxes, typically some amount of money for health insurance ($0-$30k depending on the employer), maybe paying for office space, etc, etc.
A €40k salary in France means the employer is paying (if I read https://www.activpayroll.com/global-insights/france at "Social Security in France" correctly) somewhere around €21k in payroll taxes, plus whatever other benefits/administrative/etc expenses they have. I assumed the "family allowance contribution" of 3-5% is paid by employee, not employer, but I'm not sure.
That's assuming that €40k is the gross wage and not the "wage after employee side of payroll taxes". I don't know what the French custom is here in terms of what the salary numbers mean.
Anyway, the employer cost of just that €40k salary plus the obvious payroll taxes is $73k or so (with the payroll taxes and current exchange rate). Obviously still smaller than the $108k for US salary plus payroll, but not as much smaller as it seems at first glance.
Also note that in the US it's normal to work longer hours for more weeks for that money than it is in France for the French salary, though the effect is actually not too great if the US job is mostly 40 hrs/week, 2-3 weeks vacation, etc.