Success for open source is when the term 'open source' becomes a non-factor in the decision making process, when people hear about Linux and compare it to Windows NT, and they compare it on the feature set and don't have much of an excuse not to use it.
I'm not of the opinion that all software will be open source software. There is certain software that fits a niche that is only useful to a particular company or person: for example, the software immediately behind a web site's user interface. But the vast majority of software is actually pretty generic.
Engineers in the developed world should be arguing not for protectionism but for trade agreements that seek to establish rules that result in a real rise in living standards. This will ensure that outsourcing is a positive force in the developing nation's economy and not an exploitative one.