So says a fresh report from McKinsey highlighting recent survey results suggesting that leading offshore outsourcing providers have not only benefited from the cost-cutting frenzy that has occupied their traditional client based over the past year, but have also taken the opportunity to improve their offerings and quality of service.

The report (free registration required) doesn't dive into specifics on the outsourcing companies involved, but indicates that those at the top of the field have made great strides in moving from traditional one-for-one staff replacement models toward true managed services offerings. At the same time, they have deepened industry expertise and improved internal processes, increasing customer satisfaction markedly and developing deeper relationships, partnerships, really, with clients.

This is more of a win for the managed services model than for off-shoring per se; economic realities may or may not favor businesses located overseas, but quality improvements, economies of scale, and expertise are the hallmarks of any successful managed services concern. This is as true of a business located down the street as one in China. The threat is that if overseas providers are picking up the tricks of the trade and implementing them so quickly, the combination of that business model with the lower overhead of off-shore labor represents even more bad news for US-based providers. It's no accident that IBM, Microsoft, and Google are all in a rush to expand operations in traditional off-shoring locations such as China and India, and less traditional places, such as Kazakhstan.