1) Why is India considered as the most preferable target for offshore outsourcing?

While outsourcing project for offshore development, one must consider all the affecting factors to choose the best among all. India has emerged as the governing competitor because it is the strongest selection across a range of factors :

Reputation and consistency in delivering IT services — India has a strongest knowledge base in the field of information technology with many decades of experience in delivering IT services. Many of the IT giant and most famous corporate like Microsoft, IBM, Sun Microsystems, Dell, HP, Compaq etc have their own development centers as well as outsourcing relationships with offshore vendors in India.
Availability of skilled and computer literate professionals —India has the largest range of skilled, experienced IT professionals with combination skill sets. India's knowledge-giving universities and diverse colleges publish thousands of well-educated professionals every year and they got absorbed.
Government support —Indian government is a strong supporter of IT initiatives. Easy legal proceeding and large investment in providing excellent training infrastructure support it.
Cultural similarity — India has most of the skilled persons having good command over English Language and IT professionals have extensive experience working with their American and European countries.

2) What are the ideal projects for offshore outsourcing?
E-commerce projects
Application Conversions (e.g. VB 2.0 to VB.NET or VB 6.0)
Database Conversions (e.g. SQL 6.5 to SQL 2000)
Integration of legacy or enterprise systems to client/server, Web Application, etc.
Porting projects to different platforms likeDOS, Windows 9X/NT/2000/XP, Unix
Component development (e.g. ActiveX, OOP, OOD, Reports and Modules)
Documentation, Producing of Windows Help Files, etc.
Testing
Desktop programs development
Application, Database and Web Maintenance