Depends on competition. Suppose you pay $300k a year in SF and the guy/gal in India's next best alternative is working for a local company making $50k which pay

Depends on competition. Suppose you pay $300k a year in SF and the guy/gal in India's next best alternative is working for a local company making $50k which pays for a very nice lifestyle there. If you pay $100k, you're still substantially above most competitors, and the employee will be very happy. Now with more competitors, salaries will probably end up rising close to SF ones--which are likely near to the upper bound, marginal value produced by the employee.