Hiring overseas developers

I have a question for everyone out there. Have you ever tried to hire a development team from overseas, India, the Phillipines, etc… I’ve just tried it and I would like to share my experiences.

Developer 1:

Accepted my project at a low hourly rate. Got started, but didn’t seem to grasp the project. After about a week of back and forth it was obvious he wasn’t going to do what I asked, so I cancelled it.

Developer 2:

This is a well reviewed development company, who seemed to have it all together. I created a project with three relatively simple tasks and got and estimate back that was about 10 times the length that I had anticipated. Sure, the hourly rate was low, but the project time was huge.

My question is, is this typical? I have a theory that overseas development firms are charging ridiculously low rates (1/10th of what an American developer would charge) but making up for it in the hours they bill on the project. This isn’t any observation about the technical skills of the developers, but more of a review on how their business model works.

Does anyone have any thoughts/similar experiences? I would love to hear them.