You are going to be fine.
This isn't going to completely answer your question - you don't give enough details for me to do that.
You mention 6 points, only 3 of them are relevant.
The first warning sign - klaxon really, no, klaxxxxxon (the more x's the more serious) - is this
- Based on this bottleneck, i was asked if needed help from member of an offshore to help releieve the bottleneck
Any time at all that you work with an offshore (which means "cheaper" - I don't know if that is the case here but that's what the language implies) team member, you have to be aware that this can be a covert way of you "training your replacement."
Training up a lesser-trained and cheaper team member is a great way to be made redundant. There typically isn't a whole lot you can do about it1 but you should be immediately aware that something Very Wrong is going on.
You also note
- This priority was shared with everyone, and our project was in the top 5
The importance of the project you are working on means nothing if you are not inseparable from it. Being put on an important project, while generally awesome, doesn't mean you cannot be pulled off it. Or that they just needed (as I suspect in your case) someone to train a cheaper worker to work on the role.
- WE knew before hand that our company is going to do the process of lay offs
When your company says they are doing layoffs, start looking immediately, and earnestly. Just assume you're getting fired - any company doing layoffs is in pretty bad shape, unless it is planning on being bought out. In which case you'll probably get replaced later on by someone from the buying-out company anyway, so you might as well start looking immediately.
You ask about strategically going wrong - there are any number of ways you could have gone wrong, none will be things you did recently.
- Perhaps you are a great negotiator, and were paid better than your peers? If that is the case, well, you also have a giant red target on your back.
- Were you very very close with your boss? Like, best friends close? That always helps in redundancies.
- Did you have the appearance of a hard worker - early in, last to leave? In redundancy time, you better believe the hardest workers are kept
- Did you make an essential and inexplicably complicated contribution? Great workers make their work clear and easy to understand. Unfireable workers have complicated work that nobody can understand that spreads and spreads and is impossible to remove. This works best in programming or finance - think technical roles. However if you were an admin and filed things in an obfuscated manner, that would count too.
You also want to know
Can some body who has gone through a similar situation tell me, what could be the factors behind lay off in such a situation as mine?
Well, typically they could get someone cheaper to do your work. Or they could get by without your work. Or they didn't like you. Or they liked other people more. Or they paid other people less. Or the other people had tight contracts with payoffs. Or ... there is no single answer to this question.
Finally, you ask
I need to understand this to get some peace of mind. And may be to understand where did i strategically go wrong.
No you don't. Don't worry about it. Just go find a new job, and do your best at that. Do not take being fired personally, ever. Not because it wasn't personal (although in this case i doubt it was personal) but because it doesn't matter.
What matters is having the income you need to live a happy, healthy life. Getting upset about something that has happened in the past, and that cannot be changed, and that you had no control over is not going to help with that. In 6 months, this will sting less. In 6 years? Not at all. Trust me. I've been fired/let go before, I know a lot of people have. It is all part of life, like, well, like falling down. You get back up when you fall down, so get back up into another job now.
Take it from me, when you were a baby you couldn't walk, you fell down every day. And now? You probably rarely fall (although it will still happen). It's the same with everything else in life, you just have to get up and not fret about it.
You are going to be fine.
1: There is. Do a terrible job at training them. If the company needs you to train someone and you don't, well, they can fire you - but they still need you to train the person! This sounds insane, but I have seen it work.
EDIT comments about the footnote are that it is "unprofessional" (and it is). In this particular question however, I am dealing with inuring yourself to redundancy time. As always, you should always look for new work during redundancy time. However, if you are in dire need of the work, trust me, being fed with a roof over your head trumps professionalism. Every. Time.