I was talking to a friend of mine who happens to be the Director of Engineering for a Tier 2 software product development company. We were discussing the job market in India when he made a rather surprising statement. Remember in the Web 1.0 era when a lot of tech companies were moving to India in order to garner significant cost savings and always mentioning the 1:4 rule where you could get 4 people in India for the cost of 1 in the US. The law of numbers ruled the day. The companies moved a good amount of the support functions like product support, quality assurance etc but still retained R&D in the US. With time the bean counters decided that the law of numbers could work for product development as well. This resulted in a significant amount of development work moving to India. However as per my friends observation this is not working out so well for the following reasons.
1. Talent for specialist with domain knowledge doing core product development is .very scarce.
2. Tier 2 software companies find it extremely hard to attract talent given the stringent competition they face with the Google's, Yahoo!'s, Cisco's, Microsoft's and Oracles's.
3. They end up hiring generalists hoping to train them. These generalist however end up being job hoppers who cannot be reined in with Stock options. These day hardcore cash is the only talk that sells.
4. Offloading work on the critical path of a release is still something many companies are not willing to experiment with. Apparently doing so puts the project at a very high risk.
Given these limitations my friend said he preferred getting 1 person in the US rather thn getting 4 people in India. I thought this was very interesting though not sure if this was an isolated experience or more of a general trend.