1. Seek out backwaters
    Competition is inflating prices in India and China, but in humbler markets supply still outstrips demand. There's far less first-rate technical talent in Bolivia than in Bangalore, observes Brian Reale, of software developer Colosa, but far fewer companies are pursuing it. "That meant we could get the best of the best," he says.

  2. Break it up
    The best way to protect intellectual property is to split the design work among teams in different countries. The online information exchange Mblast uses a Web portal through which developers check material in and out--no one can access the enchilada in its entirety. "Could all the guys over there get together and decide to form a company and compete against us?" says Mblast's Danny Briere. "I suppose it's possible. But there are no known instances of it."

  3. Don't get lost in translation
    Language differences complicate most non-Indian outsourcing initiatives. To avoid miscommunication, Mblast's Briere retains English-speaking local project managers in every region where he subcontracts. The first such in-country representative was a man who once translated for Briere on business trips. Todd Binkowski, COO of ESP, a restaurant technology company, stresses keeping communication as simple as possible. "A lot of our e-mails go out in bullet-point format," he says.