What do you expect when Indian Rupee climbs from 48 to 39 per dollar? The way outsourcing business model works, Indian companies got to find cheaper labor all over the world, all the time. Not only salaries are rising in India, real inflation (non-government stat) in India is not low; captive offshore development centers of Oracle, Microsoft, Intel, HP, Cisco, etc. all can afford to have reasonably good jobs while rest of the outsourcing jobs in India suffer when dollar goes down. All of these ODCs of multinational are more product oriented and hence their value addition can be higher than plain vanilla outsourcing outfits. Further, Indian political class never intends to solve the primary issue of quality higher education (and transparent privatization of that sector) which results in ever shortage of skilled professionals even in a country of Billion plus population. Add to this the constant threat of ‘caste based job reservations’ getting extended to private sectors. So are these not sufficient incentives for Indian Outsourcing companies to look beyond India? They will and they have too.

There will be more to watch as Dollar comes under further pressure and goes further down against Indian Rupee. It does not seem like things are going to be any easy any time soon.

There is also the matter of travelling to and from the U.S., which is increasingly a headache.

"Wait, you mean that markets move towards equilibrium?"

As the two previous posters have stated, the answer isn't a simple or easy Macro Econ 101 class make it out to be...

An indictment of American business isn't it?

Another giant bonus is that workers in Atlanta and Idaho are no more than three and more often one timezone away from their American bosses, and there's almost no language barrier.

Obviously the time is right for an American company to start offering outsourcing programming services that are in-country, if nobody's doing it yet.

There's no reason someone working for, say, Google, has to be in Silicon Valley, with Silicon Valley cost of living and thus Silicon Valley salaries; hell, I wouldn't want to live there.

If someone who doesn't want to live in an ultra-dense, ultra-expensive area can save a company money and get more disposable income at the same time, by living in Boise or Salt Lake City or Kansas City, everyone wins.