An American software engineer looking to escape the current fad to outsource all IT work to 3rd world nations would probably prefer a job in western Europe, Japan, or Australia, all of which are possible and desirable with a bit of preparation. But, businesses in these desirable locations are getting the outsource bug too, so lets go for the challenge: be an expatriate working in India.
As it turns out, there are a number of resources on line to assist you in your quest. A slashdot poster has provided links regarding visas , and a little searching on Google can turn up info for the low down on the cities you might want to work in.
The upshot: theoretically, it's possible. Now for some reality. This isn't the last word on relocation, but it's a start.
Visas: The Indian government slots visitors in order of preference: persons of Indian hertitage, other persons, Pakistanis and Afghans.
If your ancestry traces back to India, there is a special visa program for you. It's assumed that you've picked up some skills out in the world, and India wants to encourage you to bring 'em home to develop the nation.
If you are of other nationalities, a work visa is available. When applying, you must present documentation from an employer that they will be responsible for you. Good luck on that. If you're bringing a lot of capital and a business plan, well, that's another matter. Your visa must be renewed every year and a half or so.
If you are Pakistani or Afghan, you're due for a lot more scrutiny, and you'll have to submit considerable additional documentation.
Work Environment: Universities in India are pumping out a lot of tech grads, and there aren't yet enough jobs for all of them, although regional labor shortages do occur. Ergo, there's a lot of competition for jobs, so unless you were lead architect on the NT or Linux kernels in your last position (and if you are, you aren't getting outsourced, yet), don't think you're a shoo in. In fact, for an employer to even go to the bother of hiring you, you'll need to show a truly sterling CV. After all, it's a major business risk and pain in the ass for them to bring you in country in the first place. As an aside, there seems to be opportunity for Japanese speakers now that firms are seeking to tap the demand for outsourcing from Japan. There are openings for young (ie. cheap) Europeans/Americans to fill linguistic gaps in tech support, but don't expect to make a career of it. You'll working in a 1.5m square three sided cube, if you're lucky. Some up and coming companies claim to respect that employees might have a life beyond the office, which should tell you what the norm is. If you get into a legal dispute with your employer, it will take years to adjudicate. The Indian legal system, particularly the civil courts, are completely overloaded, the procedures make the United States look like the paragon of efficiency. When a contract is finished, you may find your ass back out on the street very quickly, just like in the States, and the social safety net assumes you've got family to lean on. You do not want to go broke in India.
Pay Packet: Ranging from INR130000 (US$2900) for a web developer with 2 years experience, to INR1400000 (US$30000) for a senior project manager with an MS. Yes, the scales are down a bit from the OECD, but pretty good for India, so with the addition of your current nest egg, you shouldn't have too much problem maintaining an Indian "middle class" lifestyle. Just keep in mind that Indian middle class priorities aren't always what you're used to. In addition, you aren't getting much credit for Social Security (USA only), and your ability to stash cash for retirement back in the OECD may suck, particularly if you're American.
Renting: As a foreigner, you can't buy property. There is a wide variety of rental properties, ranging from mansions and modern high rise condos you couldn't afford on a San Jose salary, to the very pits. You really need to do your homework on this. Even though you may be working on an Indian pay scale, land lords will assume you're loaded, so it would be a major plus to bring an Indian friend to help you negotiate.
Getting On Line: The Indian government has only started moving to open up the infrastructure. In the meantime, brother, welcome back to dialup, and it ain't pretty. Getting regular phone service enabled can require several trips to the telecom office, with a side trip to the switching station to introduce yourself to the technicians. Getting dialup on that same line means more money, and more delays. Count on the link being noisy and unreliable. ISDN is available in some areas, but usually isn't linked to a TCP trunk(!). Switched 56k and up is available in some locations, but even 56k is well over US$1000/month. This might be an ideal environment to start an 802.11b freenet, but the equipment may be a bit pricey at Indian payscales, and I'm not clear on the legal situation.
Language: English is the lingua franca of the educated, BUT to be comfortable you're going to need conversational Hindi and either Kannada (for Bangalore) or Telugu (for Hyderabad).
Culture: Nothing like you've ever experienced, and trips to the Indian market in your current metro area don't count. Expect to spend at least a year getting your bearings, if you work at it. This will be a true test of your ability to respond to new people and situations. If you suceed, you will cherish your time in country for the rest of your days. Make a point of getting connected to the community as soon as possible. Don't just huddle at home. A good start is to locate and visit the cultural institutions and watering holes of the existing expatriate community.
Climate: Highlands tropical in Bangalore and Hyderabad, meaning it's humid, but not usually life threateningly hot. If you move off the Deccan plateau to the coast, it's gonna stay hot and humid all frickin' year. In any case, mold will be a fact of life, get used to it.
Transport: I know you want to get a car, but resist the temptation for a year or two. There are several Indian compact makes to choose from, but the cost isn't going to be worth it, at least until you've gotten a feel for your budget and needs. A bicycle or Vespa are affordable, but before you take your life in your hands, spend some time on foot and public transport to learn the "rules" of the road. Buses and trains are very affordable means of getting around town and the nation, especially if you've not too picky about the accomidations. Airtravel? Forget it, on your Indian payscale you can't afford it, especially international routes.
Entertainment: Wireless TV is available in most urban areas, and cheap semi-legal cable systems as well. Radio is well served on all bands, and India, unlike the US, will probably have digital radio service soon. Movie houses are a very affordable diversion, as long as you don't mind the lack of first run Western films. Weekend pinicing at parks and temples is a popular pastime. English language bookstores are available, albeit not with a Barnes & Noble-like selection. Various cultural events surround religious holidays. In particular, don't wear nice clothes on Holi Day (late March), 'cause you're gonna get hammered with dye filled water balloons (and watch the punch served at the temples then too, unless you *wanna* get hammered). A few western-style nightclubs are available as well, just don't count on getting hooked up.
Education: Oh, so you're bringing a family? On the plus side, take it from me, some expat living will broaden your children like nothing else. On the other hand, while there are schools using English instruction , that doesn't mean it's accreditted to get your little darlings into UCLA. Schools that are accreditted ain't cheap, so you might want to stash tuition in the bank before you take the salary hit.