My friend you mean well. But there is a quality problem in India. There is volume (i.e. high numbers of engineers). But quality is bad on an average and that's the honest truth.
To prove my point. Let's look at the topcoder country rankings [At HN, perhaps I don't need to explain what topcoder is. But if I need to then in one word. Its a place where you practice Dynamic programming :-) ]:
http://community.topcoder.com/stat?c=country_avg_rating
No. of red programmers in India are just 3: http://community.topcoder.com/tc?module=AlgoRank&cc=356
Now just compare it to China:
http://community.topcoder.com/tc?module=AlgoRank&cc=156
Or Russia:
http://community.topcoder.com/tc?module=AlgoRank&cc=643
The volume of engineers thing caters to service industry very well. And the service industry mainly thrives for one reason alone. Don't listen to all the jargon all the titans of industry say. The reason is only one:
And that is:
1$ = 45 Rupees.
Service Industry is good in a way that it helps people have financial independence in a matter of 2 or 3 years. But some how, it has stayed there. Is there an Infosys like product company in India?
So there is clear lack of vision amongst the leaders in Indian IT industry. In other words very few high quality leaders. And all seem to be quite happy with the success they have achieved and now out to serve the nation. ... I hope I get proven wrong and in a decade we have Infosys quality product companies in India.
So although xyahoo is gracious enough to apologize. In practice it may be the case, that some exceptions apart, you will get low quality engineers over here.
I think, its the culture, which has been the issue.
It can be fixed but few things need to be done:
1) People have to stop using IITs and IIMs in the same sentence.
2) B Techs at IITs should want to continue with Masters at IITs, and not apply to US univs
3) More entrepreneurs have to stop cashing out midway (I often wonder, could bazee.com have been India's alibaba?)
4) The entrepreneurs have to move from a trader mindset to a creator mindset
5) More creators have to do their own startup than just feel pride in working for Google/Yahoo/Amazon
6) The VCs (in general) need to speak like tech-educated persons. Not act like fools who would rather invest in Real estate (one needs to control their urge to spill coffee on their suits)
PS: I noticed that I went on a tangential rant ... completely off topic. But I speak almost all of the above from experience.
EDIT: Added some spacing to make the points readable.