The question was: "Our clients found that outsourcing Spanish translation to Latin America is cheaper, what should we do?"
The answer was: You are selling the wrong product to the wrong people.
I keep saying in my Sales Management Workshops that translators and small translation company owners learn their business lessons at the grocery store (and I mean this as a negative comment). They tend to think that price is the only factor driving translation and localization buying practices. If they reduce their price, they are going to get more work. Of course there are different market segments and people are willing to pay different prices for the same service, and the main lesson here is that if you want to get better prices, you really need to learn how to sell. Sell to the client needs and you will command much better prices.
Chris Durban's advice was very good.
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