You give examples of some surprising strengths in these new regions for companies with the right needs. Can you talk about the Dubai market for IT skills? There are a number of countries that become attractive for offshoring when you weigh the full range of criteria -- not just costs, particularly in some niche areas. Dubai has fairly high labor and telecommunications costs and a small domestic market, but it offers a multinational, skilled and stable workforce, well-developed infrastructure, zero taxes and great amenities. The country is now marketing itself as an ideal location for IT disaster recovery and backup facilities for companies with IT-intensive offshore operations in countries like India and the Philippines, where labor is cheaper but the infrastructure tends to be less robust.

Obviously, it's scary to be among the first companies to establish operations or engage vendors in a new country. How should companies weigh and evaluate the benefits and risks? They should weigh data on the basis of the relative importance of the factors driving the decision to go offshore. They should also weigh the risks, including disruptive events such as labor uprisings or political unrest, security concerns, regulatory issues, currency fluctuation, and the strength of data and IP protection. So, for example, a U.S. company that puts the highest weight on cost will likely choose India, the Philippines or Malaysia, while a U.S. company that places a relatively high weight on the business environment may choose Mexico, Canada or Russia, or the U.S. itself. A German company with a relatively high weight on the business environment may ultimately opt for Eastern European countries like the Czech Republic, Hungary or Poland.

What if a company already has resources in a hot spot? Does it make sense for it to add new operations in the same place? Again, it depends on the company's needs. If a company opts to expand its operations in a hot-spot location, there are creative solutions to find low-wage talent. In some cases, they may be able to persuade attractive employees to move from other cities to their hot-spot operations. Allowing workers to telecommute is another option, as is setting up smaller operations in lower-cost cities relatively near hot-spot areas where they have established operations.

This is the latest in a series of monthly discussions with Harvard Business Review authors on topics of interest to IT managers.