An offshore development center in India I've been working closely with for four years is wanting to place developers with NA clients. The client would manage the developer directly or could contract a PM if needed. The developer will reside in the ODC under HR supervision. And, the client would have a U.S. counterpart (partner) to board and service the client. I am considering being that partner or introducing a partner to the ODC client. I have a pretty good idea of the pros/cons, but would love feedback from the community. One other component, the ODC can make arrangements for the Indian developer to reside at the clients location for up to six months under a work visa.
Based on my experience, the biggest challenge is getting the right talent that can pull off a quality work, I have done this by sending out small tasks to different developers and evaluate their works after. (But I guess this isn't your issue since you have 4 yours experience of working together). The next challenge I faced was time difference. Both parties need to be flexible enough with their schedule meaning working in the evening to get things resolved right away. Exchanging email with hours/one-day-delay to reply kills the momentum and motivations.
Let me know if you would love to get more information about my experience with outsourcing.