The thing about arbitrage is that it generally implies you know something nobody else knows or are otherwise in a different situation than they are. Otherwise everybody would do it, bid up the price, and there would be no more arbitrage opportunity.

Which is basically what happened. When the earliest companies figured out that you could do a lot of computer things remotely, they would hire some quality staff in e.g. India, pay them a little more than they'd usually get in India but a lot less than they would in the US, and that was great. Then everybody wanted to do that... but there isn't an unlimited supply of qualified staff.

So the competent staff started demanding more money, because they could, until they got paid enough that the savings was only just offsetting the inconvenience of different timezones and laws etc. But the current CEO still remembers that case study they read in business school from 1985 about how great outsourcing is at saving money, from before the arbitrage opportunity was eliminated by everybody trying to do it.