We have looked into cross culture differences as a reason for an offshore outsourcing project failing. There are some other common causes, however, besides that and we shall look into these.

All too often the goals and scope of the project are not made very clear to the service provider. The offshore vendor is given the impression that cost reduction is the ultimate goal.
And indeed, cost reduction may sometimes be the only motivation for outsourcing work. This defeats the purpose in itself as the service provider may not be able to achieve this given the rising salaries of IT and BPO employees. Rather than making cost reduction the primary motivation identify and focus on the value you hope to get from the project. If you decide to outsource to the lowest bidder you may be in for a lot of disappointment and a lot more cost in rectifying situations gone wrong.

When calculating the cost of the project, as you must, however, the TCM (Total Cost Management) may not be taken into consideration. All facets of the offshoring cost such as project management, legalities, dispute resolutions, travel expenses and process integration must also be taken into account.

With offshore vendors usually situated in different time zones there often is a lack of real time communication, resulting in delays and misinterpretations and misunderstandings of messages, e-mails and such. Make sure you start your project with very clear ideas and explanations of what your aim is. Be very precise about what exactly you expect from the vendor and what your project schedule is.