I worked with Indian off-shore and on-shore outsourcers, and their working conditions terrified me. These were IT consultants, and as you said, all but the tiniest percentage at the very top were treated like slaves.
1. Services
2. Products
The product companies's culture and environment are on-par with silicon valley and this includes a good pay as well.
Services is another matter. The fundamental issue is the business model. These companies earn revenue per person and hence the incentive is to over-staff or over-sell the people needed. There is no incentive to solve or be pro-active about customer's problems.