Hughes, 24, is a former first-round draft pick (circa the 2010 NFL Draft) that has done very little with the Colts, registering 62 tackles and five sacks in three seasons - though he did emerge a bit in a 3-4 defense with four sacks in 2012. The 6'2", 254-pound edge rusher played collegiately at TCU and was highly-rated on Buffalo's draft board three years ago, when GM Buddy Nix was in his first year on the job. In his last two years at TCU, Hughes recorded 36 tackles for a loss and 26.5 sacks.
Sheppard, 25, was the Bills' third-round draft pick in the 2011 NFL Draft. He has been a part-time starter at inside linebacker for the past two seasons, registering 150 tackles and two sacks in that time frame. The Bills drafted linebacker Kiko Alonso out of Oregon this past weekend, however, and Sheppard's limited ability in coverage lessened his utility in a hybrid defense like the one being installed by Mike Pettine.
On the surface, this looks like a sensible trade for Buffalo. They send Sheppard - a good young player - off to a team with a defense that better suits his skills, and they acquire a skilled pass rusher that they can try to develop a bit at a reasonable price.
Sheppard's departure does, however, create a bit of a hole at middle linebacker, where just this morning it looked like he and Alonso would be competing. Don't be surprised if the team's interest in free agent Karlos Dansby rekindles now that Sheppard is headed to Indy.