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Will Apple's wonder gadget get more memory? Will it come in different colors? Who cares. A new processor is what it really needs.

Will the iPhone get more flash memory? Will it get new features, like a compass?

Who cares. What the iPhone really needs is a new processor. And there is no sign, yet, that it will get one.

Apple ( AAPL - news - people ) alluded to the problem in March, when it introduced new software for its smart phones. The reason it doesn't run more than one third-party application at a time, Scott Forstall, Apple's vice president for iPhone software development explained, is because such work will drain the battery too quickly.

It's more than just a power-management problem, however. "One of the drawbacks of the iPhone right now is it can only [run] one application at a time," says Will Strauss, president of wireless market research firm Forward Concepts. With a more powerful processor, he adds, the iPhone could run several applications concurrently.

Apple's rivals are already heading down that path. Palm is pushing out a new phone based around Texas Instrument's ( TXN - news - people ) OMAP3430 processor. One of the Pre's key features: the ability to show the user information from more than one application at a time. The software makes it slick, but TI's hardware makes that possible.

Apple, meanwhile, relies on an application processor from Samsung. There are two problems there. For starters, Samsung also sells smart phones, allowing it to give its phones the same capabilities, on paper, as Apple's iPhone. The bigger problem, however, is just about muscle. The relatively dinky processor can't match the TI model's power.

There are several possible solutions. Samsung could build a new processor around the same ARM Cortex-A8 architecture TI uses, or Apple could switch to TI, Strauss suggests. Alternatively, Apple could build a processor of its own, presumably one based on the ARM-architecture, with the chip designers it picked up last year with its acquisition of PA Semi (see "Apple Buys Chip Designer").

There are no signs that Apple is doing that--yet. Then again, if Apple were, it would likely keep such a move a very tightly guarded secret, because it would be the only information about its new phone that would really matter.

Most of the outsourcing deals in the past have gone to familiar locations such as India and the Philippines for software development and customer service, and China and Eastern Europe for manufacturing.

Now the rest of the world is jumping in, making it difficult to know where to turn and how to judge what's a good bet and what isn't. Forbes.com caught up with Amit Shankardass, chief global marketing officer at global outsourcer Sitel, to talk about what's changing in this market.

Forbes.com: What do you need to look for if you're outsourcing to new areas?

Amit Shankardass: From our perspective, the key elements are labor availability and skills knowledge. It's also important to consider protection of IP [intellectual property]. There is data going back and forth, so any leakage is not a good thing. And then you have to consider the normal things you would look for in any outsourced location.

What's driving this?

In the past, India, the Philippines and Eastern Europe have been the most typical outsourcing locations. Two things have changed. First, there has been saturation in those markets--particularly the big cities in those markets. Second, there is a desire among other countries to play in this arena because of the success of places like India and the Philippines. They see an opportunity to develop their economies by servicing non-domestic clients and pulling in foreign investment.

Which countries are you referring to?