I have hired and worked with "offshore" developers even though in a big corporate. Is it effective ? That depends on what your goals are. In our case, the goal was not to have the "best" or "crème de la crème" but just someone enough who can work with knowledge BAs and PMs onshore and get the job done. Cost: $10,000 per headcount/year.

At one point of time, my boss will ask me to interview a bunch of developers together. yes, like 7-8 in one room with teleconference. Goal is to select 2-3 out of them. Guess what was the most important criteria ? Communication skills!!