The Big Blue is making the state of Indiana and its residents see red. In a series of events that began with the signing of a very profitable outsourcing deal between the state of Indiana and technology outsourcing company IBM, the deal has now ended up with IBM (NYSE:IBM) filing a countersuit against Indiana late last week in an affair that began as, well, somewhat good, to bad and now, to worse.

Contrary to what some naysayers of outsourcing are saying, the industry is alive and well, and it seems that it’s going to stay for a long while yet. As mentioned in a previous article, competition in outsourcing is becoming very stiff now, what with the industry expanding, as is what professional services firm Pricewaterhouse Coopers surmised in its Jan, 2010 report. Everyone wants a piece of the cake, but when everyone’s toting the same salver, it’s a bit difficult to decide to whom to give a piece to.