InfoWorld reports on a more deep form of outsourcing:

If previously the preferred route for low-cost, offshore development in India was to set up a captive development subsidiary, ISVs are now looking at alternatives such as third-party outsourcers that specialize in end-to-end product development, said Sarath Sura, managing director of the Indian operations of Sierra Atlantic Based in Fremont, California, Sierra Atlantic provides outsourced IT services and has a product development facility in Hyderabad in south India.

Which is kind of where I figured this would go. Why did I say it sounded dodgy? Well, get a load of this quote from the article:

To hedge risks, some ISVs outsource to more than one Indian outsourcer. Senable Technologies Inc. a startup in Dallas, for example, has outsourced development to three vendors in India, including Aspire, according to Andy Pulianda, the company's chief executive officer. Senable selected the three vendors after evaluating about 100 companies.

"India has the capability to provide robust commercial product development, but significant due diligence is required before selecting partners that meet your requirements," Pulianda said. A major pitfall, for example, could be low price because the vendor offering the lowest price may have cut costs on infrastructure, communications links or on security, Pulianda added.

Welcome to integration hell with that strategy. Here's a far better idea - hire half as many developers as you think you need, and have them use Smalltalk. You'll actually get a product out the door without the overhead of managing three development teams 12 time zones away.