A software engineer in SF probably has a higher BATNA than one in Delhi. Not in every case, but in most cases. So the amount you'd need to pay her to accept is higher than the amount you'd need to pay the engineer in Delhi.
You could decide you'll pay them both the same. Or you could decide you're not willing to pay SF salaries and will only hire people outside the US.
But, even if you do this, would you be willing to pay every employee at each level the same amount as the highest paid employee at that level?
If the answer is 'yes', what's the most expensive city you've visited? How much was a typical restaurant meal there? Do you pay that amount at every restaurant you visit, wherever in the world you are? I mean, the value of each meal is the same, right?