Outsourcing to Indian companies like HCL was a thing way before covid and remote work. Results were varied. I never felt threatened as a remote employee
Everyone looks to india, but that isnt the only cheaper labor market. If you work a tech job in the bay area, the most threatening labor market isnt india or china, but west virginia and alabama. The most direct threat isn't the overseas person willing to work for 10% of your wage, but your drop-in replacement willing to work for 80% of your wage because they are paying 50% less in rent.
Wouldn't a Bay Area company outsourcing to West Virginia just be remote work?
I think the point is that it's remote with presumably fluent English, cultural similarity, and a time zone difference that is absolutely routine for many, many teams.
I think the issue is you keep saying 'cheap' labor and a 'crash'. It might be better to qualify your statement as SV/FAANG salaries may adjust down, but for the vast majority across the US salaries will likely go up. I would also bet that many in SV will happily take 80% of their salary if they can live anywhere they like.
Do you know anyone from these states? I know a bunch of folks and your characterization is inaccurate -- the talent that you have accessible from non-"premium" US markets is generally also not as good as what you'd find in NYC or the Bay Area. The set of people you're describing are those from these states that are both competent enough to work at a FAANG but also unwilling to move to an existing city that FAANG hires in. What I've found is that population in general is not that big -- people that have the ambition and grind to get into a top software shop in general are also willing to relocate for it.
When living and working in a major regional city, you can really feel the quality difference between locals (grew-up in the city) vs move-ins. The people who move-in have much higher motivation. I have seen this same pattern repeat over and over again in my career in multiple major cities.
In my experience, HCL "consultants" (non-full-time-employees) are consistently the worst for low cost, offshore talent. My old teammate used to say "HCL stands for 'hopefully can learn'."