Barack Obama’s outsourcing policy means that there would be no tax breaks to US companies that outsource their jobs abroad. The details are awaited. The Obama policy is not good for the Indian outsourcing companies. His statement has ruffled the Indian outsourcing industry, as well as the American outsourcing companies that are alarmed and hurt by his statement. Nearly 70 per cent of Indian software exports of close to US$40 billion are destined for the US market and of this a hefty 40 per cent are used by the US financial firms that are currently in deep trouble. Obama policy would affect the American companies, while it may prove to be the last nail in the Indian outsourcing companies, fear economists in both countries. America had always championed the cause of free trade and globalisation. But, Obama’s protectionism, of stopping the US from outsourcing jobs to India, is a classic case of the tail wagging the dog. Outsourcing had enhanced the competitiveness of the US corporations and had created more jobs within the US economy. It’s still not clear how Obama will achieve his protectionist objectives. What policies would help him achieve it? And how can he be sure that American companies may not devise plans to beat the system? How will he keep a track of the job outflow? The fear in the outsourcing business in India and America runs deep. Software and IT companies in India may be forced to shutdown their operations completely. What will Obama’s outsourcing policy for India trigger, depression during recession?