Well the problem is not about outsourcing to India, but outsourcing to people who are not really programmers to begin with. Almost 80% of my classmates ended up in software outsourcing companies like this. Guess what? We didn't learn computer science or any meaningful programming in our classes, ever (we actually studied biotech). Almost none of those guys have probably ever typed a single line of code until they were hired. They're just put through some intensive 2 month training where they suddenly magically learn programming (most of these people barely passed every exam they've ever encountered in their life, btw). I'd say 1 in 10 of those people actually cared to learn stuff as opposed to just currying favor with the TLs and being dead-weight in the groups. But the ones who do the work seem to be universally unappreciated thanks to rotten corporate politics. I've seen meetings progress in these teams and a bunch of stoned school kids have probably had much better luck deciding on their agenda than these people.
Does it mean Indians are not smart? Of course it doesn't! It's just that most Indians who actually are smart either transport themselves to the States or end up in the Indian branches of companies like Microsoft or Oracle. Only the absolute bottom rung of barely-competent people end up in software outsourcing companies and that is why you get such POSes out of them. And don't even get me started on the call-center recruits!