So there is probably a lot of truth in the reporting, but the shock value of the story comes from the numbers. 95% you say! Oh my! We cannot have any Indians write code! The details, in this case, matter a great deal, so lets take a look at some of the unanswered questions that may impact the accuracy of that number.
* What does "...not write code that compiles" mean? Were the people being tested provided an IDE? I'm an expert Java programmer, but if I were to open up a text file and type Java code, odds are pretty good that my code won't compile on the first try. That's what IDE's are there for - to fix the inane syntax issues. But lets say that the IDE's were provided. What sort of languages were used in the test? Were the test takers familiar in the language being used? Was the measurement really meaning that they ran out of time to make the program compile or that they were incapable of making it compile because they really weren't a programmer? I note that the "cannot even compile" statistic is 2/3 - not 95% according to TFA. Still bad, but details are needed to see what was being measured.
* What does the sample mean? TFA says that the sample size was 36000, but how does this compare to the universe out there, and who made up the sample? Were these graduates in computer science or first year students or people already working in the field? What was the level of quality for these universities? Where did the 5% who did good come from, and did those 5% come from the really good schools? Was the sample size structured to represent the real world distribution of quality in educational institutions?
* Bias: who is aspiring minds, and what is their motivation? Are they tied to a particular agenda? Is there a competing country that wants their programmers to be hired over Indian programmers pushing these stats? I will point out that there were numerous doctors pushing the agenda of the tobacco industry, and numerous scientists pushing the agenda of the oil industry (global warming). So, yes, the affiliations need to be clear.
I will also point out that in the silicon valley, Indian engineers are present in high numbers. And a lot of the clamor for getting Indians into the US comes from companies in that area. If 95% of them were useless, I can't help but think that there would be less demand.