Indian IT outsourcing has been the vast majority of cash flow into the Indian IT sector, that much is undeniable. There is some actually good Indian IT talent out there and it's picking up steam, but that's not where the money is yet.
And to the western/eruropean markets, Indian IT industry == Indian IT outsourcing industry. And the Indian IT outsourcing industry has developed a very strong negative stigma which I expect will completely kill it over the next ~5 years. Does the 'real' Indian IT industry have enough cash and momentum to survive that? Maybe, I'm not sure. One thing is for certain: all the low skilled IT workers which make up 95%+ of the outsourcing industry, they're all going to be permanently out of those jobs and new jobs like that aren't coming.
And from personal experience with those low skilled indian IT workers, I think it would be a miracle if even 1% of them are able to re-skill for the real engineering work that's now in demand. Not only that, but just the fact that you're in India is a strong signal that that you're terrible, even if you're actually not. I've seen Indian IT workers with CVs 3 times the size of mine and glowing recommendations from past employers, and most of them failed fucking fizzbuzz. After you deal with a dozen people like that, you just start to subconsciously dismiss Indian candidates because chances are, they're gonna be another one of those.
tl;dr: In terms of economics, the Indian IT industry is the outsourcing industry, and that cash well is drying up fast. Infosys CEO Vishal Sikka saw the writing on the wall and bailed on a high note.