There is a myth that Indian education system is great — particularly among Indians in USA. This myth is because most of them in US were product of some of the best colleges in India. As Nani Palkhivala eloquently put in his book — We the Nation — Indian education system has serious problems. These problems are now being explosed by the outsourcing demands. At best, yes at best, the education system is very uneven. More realistically, except for top single digit percentage, most colleges are producing very substandard products. And this is now becoming a serious proble.
NYT has a article on this today. As said there:
 A study commissioned by a trade group, the National Association of Software and Service Companies, or Nasscom, found only one in four engineering graduates to be employable. The rest were deficient in the required technical skills, fluency in English or ability to work in a team or deliver basic oral presentations.
Many outside universities, including some top universities from USA are planning to open campuses in India. That will help. But what is really required is serious attention to the basic elementary level education. This is where the problem begins. Hopefully leaders and politicians will realize this and act on it.