It's happened to me lots of times. I move on to the next enterprise, whatever that may be. God willed Freedom not the security of guarantees and protection. If those folks in Mumbai learn how to do stuff and compete with others around the world that's a good thing.
I cut my teeth as an Unix SA almost two decades ago at a very low rate, lower than what the offshore companies charge, even accounting for inflation. All on site work. No benefits. I now bill out at 2200% more, all expenses paid, and about 30% of my billable time is performed remotely from my home office. Selling 1,000 hours per year is not a problem. With this kind of gross income, purchasing benefits is not something I lose sleep over. Next year I'll likely be on a project full time, 2,000 hours, all expenses paid; we went through a protracted sales cycle last quarter and are just now waiting for some fixed assets (software licenses) to depreciate enough to justify starting the project for the client. I perform the sales work myself, and enjoy this "soft" side of the business. I actually kind of dread billing out that much because it leaves me precious little time to develop other aspects of the business. One day into every project, at no point did any of my clients ever consider going offshore or anyone else for that matter. I have a 100% delivery and satisfaction record, and 20% of my available time is booked ahead of time each year for repeat business. It was not hard to reach this point, but it did take a lot of work. Anyone with moderate IQ and disciplined drive could do it.
The attitude of most IT staff at my clients could best be described as insular entitlement. Most don't make allies with the staff at the business units they serve.
Though rare, I have seen IT staff characterized as indispensable to the revenue generating side of the business. A "touch anything else, but don't you dare touch that because we can't survive without them" response immediately comes from these units if the C-levels even think in the direction of the IT folks. It's relatively easy to become a sacred cow to these powerful business units: use your knowledge to either make them look good, or make their lives easier. Rinse and repeat, never resting on the laurels they heap upon you. Never show irritation, annoyance, or short tempers, always go the extra mile to help them.
To say that most IT staff in general (no matter where they are based) don't meet this ideal is an understatement. It is no wonder that some IT staff are treated like commodities when they commoditize themselves with their unhelpful service delivery that is like almost everyone else's. Now I'm a modest coder. I code better than anyone I've met at a client site, but have friends (running their own business as well, as it happens, a program trading firm) who run rings around me. That differentiation helps, but at the end of the day, knowing how to work with managers, identify business requirements and map them to a successful implementation, and understanding basic business and sales principles counts more.
Gotta get back to writing up some proposals, so I'll try to wrap it up quickly here. Folks, if any of you have been in the IT business for longer than 5 years, you cannot say you were blindsided with this surge in offshoring. Any moderate reading of the industry trade magazines would have told you starting at least 15 years ago that companies will no longer stand for highly compensating pure technical specialists only getting technical work out of the compensation, and that business relevance would become an increasingly dominant component of measuring an IT staff's value. Understand and apply basic business sense, and you'll find it easy to demonstrate your value against all competition, no matter who it is.