Offshore may be considered "cheap" by people with no knowledge of offshore software development, but you also get what you pay for.. and I think you just found that out.
I want to help you, but I'm confused by you saying you cant find anybody. There is a lot of people who want to code in games that have the skills,. Unless of course, your trying to underpay them? That is the typical thing I see when people say they "cant find anybody". Its not that we don't exist its that we have a lot of options so getting our attention is very hard if you wrongfully expect to be cheap about it. And please understand that I do not say this to be rude or anything; I'm just trying to educate you on the facts. Unlike other industries where people are lucky to get a job, IT and Higher End Software doesn't have the problems another type of job have as the amount of people available still does not exceed the available positions for them to fill, so companies try to hang on to the ones they have even if work slight in order to mitigate the future risk of not having anybody who can do the work.
This is why if you want to keep your talent - or even get it in the first place - you are going to have to be willing to give them what they want.
The good news for you is that this does not always mean sackfuls of money. You could try profit sharing , vested equity, free food, full medical perks (Although even MS had to make their medical benefits worse to comply with recent new laws), flexible hours, working from home, or any number of other things. What are you trying now?