Quoting Business Week Online:
Six months ago, I could find high-level programmers in India willing work for $15 an hour, vs. the $100-plus an hour I was paying Americans for the same work. In only six months, that rate has climbed to $25 an hour in India, while my domestic rates have dropped to around $35-$50. On the last project I bid out, two proposals from India came in higher than domestic contractors. Admittedly, I'm in a very small sector of the larger market, and it's too soon to tell even here whether the trend will last, but I've heard similar reports from other businesses (see BW Online, 12/2/03, "U.S. Programmers at Overseas Salaries").
Not a big surprise - India's tech boom has been going like the pre-2000 bubble here - and that sort of thing pushes salaries up quickly as companies compete for the same pool of existing talent. Sure, there are other places offshoring can go, but the same pattern is likely to be repeated.