I agree - in a day and age where financial stability is akin to walking a tight rope, companies are not going to spend money unnecessarily - especially in the early days.

Yes, this money sometimes goes off shore - but if you compare it to the prices/quality that you may receive in cities such as London, sometimes the price does not fit the convenience. With a little creativity and perseverance, a startup can implement the building blocks (design/deployment/admin/software/etc) of a company for next to nothing, leaving them to focus on one thing - generating further business, which will help their country of residence (even if some is out sourced).