Outsourcing software testing, is a common form of QA activity being transported out in the western hemisphere. Software concerns in that region often try out this 'outsourced' form of software testing to reduce their costs. The idea is that if a software tester requests for $ 60 to the hour for testing projects, the outsourced work should probably cost a lot less than that. So that would be more feasible in terms of overall costs incurred for the particular project.
Outsourced software testing does have many advantages and several drawbacks as well. The largest advantage, apart from reducing cost is that you get a second opinion about your software project from a neutral party. Person who is most probably living in a totally different environment can give you an insight into your system from a QA point of view and that can, in fact help you in improving your system. There could be many different ideas to the system that you will get reports on, following an initial test cycle, as the software testing not only means testing the project but also make any suggestions / improvements in the system and that is very important. A vital part of any software test activity, in fact. So now you not only get your software project tested, you also get suggestions to further improve the project and that helps manifold to the overall Business. You can improve your revenue and also your client base should theoretically increase as a result of the improvements. So you get the work done at a low cost and with prospectively great advantage!
There are, however some downsides to outsourced software testing as well. Often the communication becomes an issue between the concerned parties. Also the time difference creates scheduling issues. In order to cover for that the parties have to agree on a time frame in which they can hold their meetings. Mostly it is the case of being up and working on an awkward time! Also, if the other party attempts to 'cheat' on the client you have to cover for that. There is something called NDA (non-disclosure agreement) which is a legal contract between the concerned firms / companies. They keep the Business information protected this way.
Also another issue with using an outsourced software testing company is that you need to understand the other country's culture as well. Especially if it is a long-term big budget project, where the parent firm will most likely need to visit the hired company's offices periodically (could be once every 6 months or once in the year, depending on the companies' mutual agreement). Another possibility is that the parent firm appoints a manager or a representative who goes to the other country where the hired company is located, and he stays there for the duration of the project so as to make sure the proper work is being done. That way there is less stress on the overseas company to keep the work in check.
To conclude, using an outsourced software testing company has many advantages but also some disadvantages. It all depends on the category of project and the resources of the company when it comes to deciding if outsourcing is worth the effort or not. It does have the potential to bring great improvements, and can also end up being very costly in terms of time and money space!