I am comparing manager/architect positions in Europe with long-term (5+ years) contractor positions in India. Yes, I know contracting is more expensive than employees, but not to this level. We use contractors because internal developers would be paid so bad, nobody would apply (and they don't).
I'd say they pay bad so they don't have to have the local employees that would be protected by strong local laws. Contracting is effectively cheaper, mostly because the company doesn't care about the health of the local company/economy.
