Right now there are vast differences but overall things do change over time. As the Indian economy grows their average compensation also grows and so, eventually, the standards of living will tend to even out. That's assuming that productivity rates stay the same. On that point though the USA seems like it'll always stay ahead of everyone else. It makes things a lot tougher for Americans because we work so hard but that productivity also means that a great deal of the benefits offshore outsourcing become somewhat illusionary.
A great number of companies, and my friends who work at those companies, are starting to bring development back from overseas. The problems these companies have in software development range from cultural issues to wildly varying qualities of communication. A particularly sore point for a number of companies is India's overwhelmingly discriminatory attitudes towards women in the workplace.
In one example a good friend of mine had to deal with a bunch of Indian programmers who simply wouldn't talk to her! They refused to acknowledge that she was the project manager and would *always* turn to face a man when talking. It absolutely drove her nuts and she literally had to read them and their consulting company's rep the riot act to get it changed.
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On the note of the avatar, I admit that I stole it from <a href="http://www.sinfest.net/">Sinfest</a>. A quirky and wierd little internet comic strip. I highly recommend it.
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