I work for a company that has similar practices. When staffing a project, there are three general types of resources to use:
1. US based employees
2. Foreign employees that are here on a work visa (this is what the OP's post is most likely referring to when it says 'ISGI landed resource'
3. Off-shore employees (ours are mostly in India and the Phillipines)
The cost rate for groups 1, 2, and 3 above are significantly different (we generally bill the customer for hours worked at a specific rate), but the knowledge level and productivity are significantly different as well. Also, most of the stuff our US based employees do simply cannot be performed by groups 2 and 3, for various reasons (mostly because all they do is grunt work, stuff that wouldn't warrant even warrant the starting salary of our US based employees).
I could care less, and have nothing to add as far as the legality of this practice, but we do regularly ask the customer whether they would like to use off-shore resources for certain tasks in the project, because it is cheaper for them (the customer) and makes the project more profitable for us.