> This is only true for companies where minimizing the cost is the best (sometimes only) strategy to increase profits. Tata, EDS, Accenture, and the many IT body shops are all in this camp.

It's true for any company. Did we forget about the Silicon Valley wage fixing already?

> This is much more valuable than saving 30% off in an individual's compensation -- at the expense of high turnover, when said worker realizes he/she is being underpaid.

That's the entire point, if you underpay, you get high turnover. But what is considered underpaying is relative to the market rates. And if you get more supply, market rates drop.

As an example, interns at Google in the US earn about $7000 a month, while in London they get about £2000. That's because of market rates in London are far lower than in the US. Ideally, tech companies in Silicon Valley would really love it if they could have the same employees as they do now for half the price.