Gone are the days, when people relied on boot polish vendors in streets for their shoes. Now, more people prefer polishing their shoes at home and some prefer buying new footwear after losing interest in their current pair. This came into picture because new footwear has become more affordable, some people did not like insulting people who do boot polish and most vendors felt boot polish doesn't earn them much to feed themselves. Coming to the point, our Indian IT industry has moved in similar lines of 'boot polish' since decades and now paying a heavy price of job losses leading to unemployed youth.
There were several instances, during my career in IT industry, recommending my then managers and bosses to focus on product development or online shopping portals because I lacked the financial muscle to pull such startups. None of my bosses approved my ideas. They trashed my ideas. My advice to stop doing 'boot polish' jobs, of doing menial maintenance activity of decades old applications for foreign clients, was ignored. They were more comfortable with making of easy money then. Now or sooner, there may be no outsourcing of IT jobs to India because our foreign clients will buy products from third party vendors to run their business or have their own dedicated Team to maintain their legacy software. As the problem is stated, I will throw light on how Indian IT industry can be viable. Productize every requirement of their clients and sell them the products with Support. This leads to selling same product to more customers, thus more profits for the vendor. This will even create a vast pool of highly skilled domain experts from India.
Still, IT employers are preferring to do body shopping business in US by hiring locals, but not building products. Foreign clients understand that having their own dedicated team for IT work will save their money rather than outsourcing to Indian IT firms which simply wish to mint money on Consulting. I understand Indian IT industry is filled with bad leaders who discourage innovation out of fear of losing their positions/ short-term profits. GOD save India.