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So the major difference between his $65k salary and a worker's $6500 salary in India is due to government induced problems?

Well, it does have some to do with it. The amount of payroll taxes an employer must pay, the high level of red tape and regulation it must overcome to hire American workers, does indeed drive up the end-price (salary) of that employee.

Secondly, the US is a much more developed country than India. As Indian labor becomes more sought after, (currently it is in its budding phase of demand), bids on projects will be raised and Indian salaries will be bid up by firms.

There will be a sharp correction in the price of Indian IT labor as its workforce is unable to meet global demand.

Yes, IT, as a non-local skill is one function easily able to be outsourced (as we are also seeing with customer service, CAD/CAM drafting, data entry, certain areas of Human Resources, etc.).

Doing business in the USA is becoming exceedingly expensive. And with every nice-sound proposal or bill put forth by our representatives in Washington (primarily Democrats), our cost of doing business inches higher and higher.

For instance, in CA now employers are soon going to be REQUIRED to offer 6-months 50% PAID Family Leave to employees (the reasons for taking leave is very vague, as well, wide open to interpretation and lawsuits).

There is another bill which will REQUIRE CA businesses with 20+ employees to pay 80% of all employee health care costs and those with 200+ emplyees, to pay this amount for all employees and their family members.

Legislation to prevent businesses from leaving CA due to this (which is just what they are doing), would do nothing but drive these firms into the ground. Capital must be allowed to flow to its highest return, and in so doing, equalize price-levels across the board.

Such is the case with India, and forcing American companies to do business in a hostile business environment, such as the USA is increasingly becoming, will do nothing but drive companies out of business.

Excessive government regulation most assuredly does play a large role in the huge wage gap. However, the free-market will soon begin to close that gap as well, due to competition for Indian labor hours.