Cultures are different The cultures between the onsite team and offshore team are likely to be different. The areas where this could be a bother are in planning, estimating, meeting etiquette, language used in emails and documents and communication protocol.

Different time zones are difficult to manage This can be an inconvenience as the overlap time of team members is very little. There may be only an hours overlap in a day. It makes it difficult to build team dynamics across borders and with such less interaction.

Unable to run the project as its done onsite Some adjustments have to be made to the project management style to factor in offshore team members. For e.g. important team meetings will have to be scheduled at hours convenient to both sides of the team.

Needs more upfront planning Assigning work and working with an offshore team requires greater planning. For e.g. If the offshore team need access to a system or need clarification on tasks during their work day, there is a good chance that the onsite team will not be around to close the issue immediately. Issues like these can result in productivity loss and offshore team morale going down.

Initial startup time is higher than onsite projects In any new offshoring engagement some initial time will be lost in setting up the offshore engagement. In the initial project plans its almost impossible to plan all factors keeping an offshore team in mind. This is normal and its typically a one time cost at the start. Prudent plans should buffer for this time loss. Subsequent phases or initiatives under the same umbrella dont have this overhead.

System,module requirements for an offshore task need to be defined for a minimum of a weeks effort. Anything less would make the process inefficient. This should be possible in almost any project. In fact in agile extreme programming projects this is a feature.

The benefits in offshoring shouldnt be measured only in terms of costs. The other aspects to consider are shorter time to market, getting access to a larger skill or resource pool, freeing time for more important business problems and reducing management like people, project overhead.