The profits aren't even that great, actually. A well run outsourcing effort can squeeze out 20% cost savings for comparable quality and timelines...but even those profits are elusive if the Dollar fluctuates in value too much.
Of course, the myth that was created by the outsourcing hype would have you believe that Indian software is just about free, almost pure profit, and better quality than anything that we have here.
But if that was actually the case then we would have been seeing all new operating systems developed domestically by Indian firms and exported here, rather than seeing Linux getting developed in the U.S., EU, and Mexico...much less Windows getting developed in Seattle.
So the hype and myth is a bit different from the reality on the ground (to say the least).