Considering Outsourcing to India?
Well - if you are, perhaps you should read my colleague Matt Lockhart's article that covers some of the risks, some obvious, some less so, that outsourcing inherently exposes you to.
After having visited India myself in a professional capacity, I would first say that I believe India has a very bright future. The entire country seems like it is under construction. There is a booming middle class there that is starting to consume goods and services and engage in greater levels of economic activity.
More importantly, there is very much an entrepeneurial spirit going on in that country. It will not be long before the developers in India decide that working for American and European companies doing the work that IT workers here don't always find as compelling isn't as good as writing software for their own internal market.
In other words, the Indians are becoming more ambitious. THEY want to make their own "Google", their own "Windows", and so forth. As the developers in India start to move towards first world standards, and as internal demand more often competes for that same pool of resources, the cost savings by shuttling work to India will diminish to zero.
Now, of course, that might mean some folks start talking about outsourcing to other countries that are less developed. When I was in India, I saw a news report that Infosys was outsourcing jobs to Morocco and China (lets leave aside the irony that Indian developers often have the same feelings we do about outsourcing). However, unlike raw labor in manufacturing, the farther you go down the development food chain, the fewer software developers you are able to produce out of that economy. Producing a software developer requires a certain amount of infrastructure and capability in your economic system - which you can find in many developing countries, but certainly not on a level that is equivalent.
In other words, there is likely a natural limit to the supply of people you can outsource to, and the further you go down the chain, the more that other exogenous risks start to pile up and increase your risk adjusted costs. It would be wise to think about these risk adjusted costs as you consider the ROI equation on your projects.