Presumably by "outer circle" you mean a circumscribing circle that just touches the four corners of the square.
If the area of the square is 196 decimeters squared, then the side length is \(\sqrt{196}\) or 14 decimeters, which means the diagonal of the square is \(14\sqrt2\)decimeters, which means half the diagonal is \(7\sqrt2\) decimeters. Since the radius of the circumscribing circle is equal to half the square diagonal, I'm sure you can work out the circle area from here.