The problem with Software Engineering in India is that there is a tremendous shortage of good people just like anywhere else in the world. The good people in India are so in demand that they are just picked up immediately by the giants – Infosys, Wipro, TCS, Microsoft, Oracle etc. The smaller American companies don’t stand a chance, they have to hire the leftovers who tend to be inexperienced (6mos to 1yr) and with poor educational foundations.
India may be home to IIT, BiTs etc. which are really good schools but only a fraction go to these institutions. Most engineering curriculums are dated and the quality of teaching is substandard. Because of the boom there is such an urgency to churn out graduates in huge numbers that the quality takes a back seat. There is also the fact that many are attracted to this profession not due to true passion for developing software but rather because it’s lucrative.
India is experiencing what the US experienced during the .com era, where if you knew how to surf the web you got a $80-100k job!!
NASSCOM (the Indian equivalent of IEEE) recently released a report that stated that only 25% of Engineering grads per year are “employable” due to poor technical ability and also other soft skills. In my opinion, India will face huge hurdles in coming years due to a shortage of *useable* talent.