It looks like SAP is shifting focus from India to China and Eastern Europe because "India is getting expensive".

It's the Hyundai Effect: Not so long ago, Hyundai was seen as an inferior product compared to competitors Toyota and Honda. In order to lure that portion of the market, they had to offer something different, and the easiest way is value: give the customer just as much, or in some cases more, for a nice discount. As people become comfortable with the Hyundai in the same breath as those competitors, you no longer need to rely solely on a discount to make people notice. (In some cases, higher prices are actually better because many - perhaps rightfully - believe that too cheap equals poor quality).

When India no longer needs to offer the same steep discounts to have people consider moving some functions there, it significantly changes the outsourcing analysis.

That's not to say you don't still buy the Hyundai, but since it's no longer dirt cheap you start to make a proper analysis of what you get for your money.

For those drunk on the cost savings, they move to the next discount automaker, or country, trying to get a foothold in the market. The Kias and the Saturns of the world will eventually gain the same credibility and equality if they are really a comparable product and will inevitably want to cash in on that credibility at some point.

That's why I don't think outsourcing for the traditional reasons is really a sustainable, long-term approach for quality work. After all, you get what you pay for, right?