Here is my explanation based on my observations.
- The mass expansion of IT in India, particularly in its second decade (late 90's to the present) was the result of the series of credit bubbles in US. Similar to China's manufacturing export bubble. Without the US bubble, the expansion would have happened, but not in the reckless, pell-mell fashion it happened.
- As a result, Indian IT companies hired fresh-out-of-college people in massive, really massive numbers - 25,000 people a year in each of the big 4 companies. Private colleges expanded massively to meet that demand. The analogy is to the US housing expansion (ultimately both were caused by the credit bubble).
- Competence arises for a good part from experience. To visualize this, do a thought experiment: how would your team look if you substitute every team member with the same person but as they were starting out fresh. A good part of competence is simply knowing the skill & aptitude make-up of every team member. When everyone is fresh, that vital knowledge is absent.
- So the Indian industry came up with a "solution" so fresh recruits don't cause too much damage: create rules and procedures for everything. Bureaucratize. Alas, that "solution" imposes a long term toll on culture of the company.