Sure is an interesting thought. None of this is sarcasm: why do US companies deal with the time zone differences and language barriers they won’t need to bother with so much by outsourcing to say, Ireland?

The mechanism is often that they'll actually outsource to someone like Accenture, who have teams everywhere, and whose contract managers will try to get their cheapest viable team onto the contract to maximise their margin. If the buyer can't judge the quality of what they're buying, or doesn't know why the resulting hand-offs, delays, mistakes and rework will cost them more than keeping everything in-house ever would have, they're going to have a bad time.

Er, US companies do outsource to Ireland.

Basically every big tech has large offices and employ a lot of people there.

The limitation is that Ireland is a relatively small country, and most Irish developers are already employed (which is why Ireland end up being one of the main destinations for tech workers being hired from abroad).

Ireland isn't that much cheaper than, say, Oklahoma. And the cultural differences with Ireland are not a lot smaller than those with India or the Philippines or what have you, once you try to actually start working together.

(Yes, all the good developers from Oklahoma move out, but the same is true of Ireland)

EU workers themselves get a lot less, but the EU is expensive because of 1) the huge payroll tax (45% in France) and 2) the challenges with hiring and firing mean you are carrying people that aren’t contributing.

EU doesn't have the scale. There are probably more SWEs in one little town in the Bay Area than entire European countries.

Also, many European devs simply move to the US. Immigration is the primary means by which the arbitrage disappears.