This isn't just an India thing. This is how government contracts work in the US too. The government contracts out to Lockheed Martin for a big IT project (used to anyway, LM got out of the business on the civilian side at least), LM hires the cheapest 'talent' they can find, loading projects 80/20 management/engineering, drag their feet for a few years, and eventually someone on the government side decides they're going to make their career by being the person who brings this project across the finish line. So they ignore or lie about the requirements being fulfilled and drag the steaming mess in-house, while LM hosts a champagne-drenched celebration. Contracting has fundamentally perverse incentives.
>Except the person on the US side who fought for and won the ability to outsource the project to save money is personally invested in success. He has decided this will make his career. So when it comes to fulfilling those contractual obligations, he will sign off on it, then bring it in house and try to quietly put together a team to fix the system to make it actually function.
Its hard to imagine the owner(s) of the company not being good with numbers here. Surely, such frauds will be found out eventually? In any case if a company has indeed hired such a dishonest person, I would hope they improve their hiring process and do some due diligence on their previous record to weed out such people in the future.
If it's a US firm, then there can be financial and legal repercussions. Good luck going after a firm in India.