The biggest problem with hiring foreign contractors is not that they're foreign, but that the mindset required to hire them cannot attract good hackers. More specifically, the kind of people who decide to save money on development by hiring offshore contractors are usually the kind of people who think programmers are interchangeable parts and can't tell the difference between a good and bad developer.<p>But even if you are a hacker yourself and a good judge of programming talent, it's very hard for you to find good people when you are in a different continent. Think about how difficult it is to attract good talent right here in America. Even if you're in an area with a comparatively high concentration of talented programmers (let's say Silicon Valley), you will probably not find the best people by waiting for them to come to you. You have to get into the right circles, or get referrals from people you trust, or go to meetups like Startup School that attract the kind of people you want, etc. etc. Now what if you were thousands of miles away? Would you be able to do any of that? Maybe via websites like this or by collaborating on open source projects, but I doubt that those are the avenues by which companies are hiring foreign contractors.<p>I know of a few companies with solid offshore development operations that are staffed with very good people. In every single case, there was someone from the company on the ground in that country, finding and hiring people in the same way that the company would do in the states.