Outsourcing software development

Good post on this by Darren Herman today. He highlights some of the options for offshoring/outsourcing programming to developing countries. I've also done some thinking on this recently and I agree with Darren that you have to have very tightly written specs and I think most importantly - a strong head of IT who can manage offshored relationships and business expectations. The CEO of a social networking startup I talked to recently has offshored 50% of his IT team via Rentacoder and so far it's going fairly well. I'm also interested in this from a big-company point of view - how do you do this without alienating your internal IT department and managing it successfully.