I will add Sellers perspective to this .I am located in India , the place with maximum off shoring advantage . There are lot of companies in India, which claims to do software/other outsourcing work and you can see these profiles in Project bidding sites. And you could see some companies giving there "proposal/ "About us " with out even giving a look at what kind of project it is.
In India there is also a location Advantage. if you are looking at outsourcing high end work you need to look at companies located in the Tier -1 cities .
Bidding price shouldn’t be the only factor .You need to do a background check and do an interview of seller and get a picture of there knowledge depth.
Let me know if any one needs any help in software related outsourcing to India .