I am currently in the start-up phase of my business, and after some digging, I found that most of my competitors consist of companies located overseas that pay their employees pennies, and offer dirt cheap pricing. My company will offer similar services, but more industry specific and personalized solutions, as well as employees with extensive experience - much more than what an outsourced company can offer...but will this be enough? I dont want to throw in the towel, but how can I compete?
You can always compete by offering something your competitor does not provide (either different products, different services, different prices, or different target market). Start by finding out what your customer needs - then build a version of your product. Iterate, iterate, and iterate.