"By denying the deduction, the hope is that it will be more expensive to operate offshore and it will give incentives to create jobs in the U.S," Cave said.

The proposed tax code changes is about as close as the White House has come . Whether the administration ties the use of the H-1B visa, which is heavily used by Indian offshore firms, is still a question mark.

Alan Greenspan, the former chairman of the Federal Reserve, said last week that the U.S. should increase the supply of foreign workers and said the H-1B cap is keeping wages high, protecting workers from global competition

The major motivation for moving work overseas is the difference between salaries in the U. S. and overseas. A job that pays US$100,000 here may only cost one-sixth that in India, said Peter Bendor-Samuel, CEO of the Everest Group, a outsourcing consultancy in Dallas.

"If there is a tax consequence here it's de minimis to the overall impact" of outsourcing, Bendor-Samuel said. In any case, he said, "this idea that people are doing outsourcing to avoid taxes is simply wrong."