On the other hand, the only reason the company hired someone overseas was to save money. They would not have even considered these candidates if they weren't hugely cheaper. Instead, the company would have hired from the local labor market instead.

What the submitter should be asking themselves, is whether they can pull a higher wage working from their current location with any other company. If they can do that, they should. If they can't, and it's likely that they cannot because most companies are operating similarly, then they're getting a fair market rate for their situation. That's the free market.