My suspicion is, if they can, an individual will opt to go where he/she can earn more/get better experience than put up with the tasks typically handed over to the job shops (WiPro, etc)...Furthermore, given these firms are the ones that most US employers deal with, the view for outsourced labor will be clouded by this "narrow" exposure...
I myself work from my home in Bangalore, while my company is in UK, and I get paid well. I have had offers from US before, but I am staying - because I am trying to bootstrap a product as well on the sides, which won't be possible/easy when I am in US.
Deleted comment
On that note I have a question for smg. I have not been able to figure out why there are so few Indian tech startups serving the Indian market. I can only think of naukri and makemytrip. Do you know why? I read somewhere that there are 120M Internet users in India now, up from 80M two years ago. Do you think it now makes sense for Indian web startups?
I'm not familiar with mobile startups in India though, so maybe there are a lot of those.
The Chinese market is stacked against foreign competition; I don't think that the Indian market is likewise restricted.
1. The total number of startups is going to be lesser due to redtape although I believe that is becoming less of an issue as time goes on.
2. It is probably perceived to be more lucrative to target the American market. I would think that a larger proportion of the ~ 120M internet users in India would be similar (young urban professional) and therefore easier to release products compared to the general public (cultural variations and interests make it harder to disrupt outside the cities).
Mobile usage is even higher as you know so it seems like mobile app startups could do really well. If the growth is happening in small towns/rural areas even better, no SV company is going to want to spend time in Gummmidipoondi to understand their target customer. I don't know if cultural variation is really an issue: look at iPad for instance, even a non-English speaker has a finger with which they can tap on the screen.
I've heard horror stories about red-tape, corrupt officials and so on from friends. But every time I've dealt with GOI officials they've been extremely helpful. Maybe I just got lucky.