I'd strongly encourage you to consider why you're likely to be downvoted before posting. I think that a milder version of what you just claimed, backed up with some data or at least some personal experiences, would have been a good contribution to this discussion. You might have been upmodded.

I tried (well, was forced by management) to remotely lead an offshore team (in India). The project was quite complicated (storing, retrieving, and interpreting the results of a large quadratic programming model with millions of variables), and the programmers were paid $12/hr. The first pass was a disaster. I described the problem generally, and got nowhere. I then asked them to use a hashmap to store the results, and they responded ".NET doesn't have a hashmap." I explained that .NET must have some kind of data structure that would allow us to retrieve a variable's value based on it's name or some other lookup key, and that's the approach I recommended they take, though honestly, they're the ones spending hours on the code, so they were free to take an intelligent approach the problem and shouldn't feel obligated to take any approach I suggested, though I was happy to help. A week later, I got code based on arrays. They were iterating through one array to get the variable name's index, then looking it up in a different array. And doing this millions of times.

So you'd think I'd soured on offshoring, right? Not really, I'd soured on trying to find good programmers with a decent math background for $12/hr. We ended up hiring two people located in India, one with an MS and another with a PhD (both from good US universities). I think we paid an annualized rate of $65,000-$75,000 each, though I don't really remember, it was around that much. That was considerably less than we would have paid in the US, and they were good programmers - even better, I was able to describe a need rather than a solution, and they were definitely able to fill in the gaps and get it done.

So, could they "run circles around their American counterparts?" Well, that all depends on how you define counterparts. If you go by dollar-to-dollar, I'd say so - it's unlikely that you'd hire someone in the US who could do this for such a low salary (though plenty of grad students here do as "research assistants" it for a tenth that salary and a tuition waiver). If you go by salary percentile, I'd say no way. The guys we hired were good, but it'd be stupid to claim that they'd run circles around the top tier of US-based programmers. The top tier in the US is very very strong.

Overall, I'm not sure it was worth it, though I wouldn't claim it was a bad experience (like the $12/hr programmer experience, which was definitely a bad one). The company still had to pay me and other developers the higher salaries to oversee the work, converting us into "architects" who managed overseas teams - and I could have just written the damn code myself. We were considerably less agile, and our local people (including me) were less knowledgeable of the code base even though we were spending time reviewing. At the same time, it's hard to hire anyone with these skills, so if they're available overseas, I'd say it's a reasonable option.

Just whatever you do, don't fall into the trap that it will be "easy" to hire "top" developers for vastly lower salaries who will "run circles" around Americans. I do think that you can, with substantial effort, hire strong developers for somewhat lower salaries who will perform well, though you will (in my experience) incur enough overhead that it makes more sense to do this to access top talent than to save money.