If you want to outsource to India, you need to find a company that hires super stars. Super stars in India demand a salary of Rs50,000 to Rs 100,000 a month. Which is still quite less from international point of view: its about $1000 to $2000 a month. A company hiring them will bill you a minimum of $20-30 per hour. Usually more like $40-45 per hour.
If you go with a company that is billing you less than that from India, you should know that your work will suffer because that company does not hire the best skilled coders.
It is less from Western point of view not from international. I'm sure that in Latin America and Eastern Europe prices are quite similar and time zone differences are more acceptable. India lose in this price range because of cultural differences as well. Usually those are small details like matching Christian and/or international holidays (therefore no conflicting days off) but sum of those details are really significant.
Again your point just confirms fact that Western developers shouldn't worry about competition from India.
I'm in Uruguay, and Tata Consultancy Services (TCS) opened a huge facility here to address just that (the time zone differences) as we're in the GMT -3 timezone.
But they're having trouble filling positions at their salaries, most decent programmers here earn more than U$ 1.000 (I make U$ 1.500 myself, and want to make at least twice that, so I'm about to start my own company).
An acquaintance had good experience with Bulgaria. It was a small outfit, just 5 people to match another 4 people working in US. American company was their only customer.
Not sure which Indian superstars you'll get for Rs.50,000 today. This may have been true in 2001, but no one I know today will go below 1.5L-2L a month.
Can you name a few companies in India that hire "superstars" for that amount? Every "superstar" I know gets close to $4500 in India. Maybe, your definition of superstar differs from mine.
If you go with a company that is billing you less than that from India, you should know that your work will suffer because that company does not hire the best skilled coders.