Interesting, so basically the threat is that you are outsourcing your Apps versus having them in house.
The main issue is likely to be that you are putting control and security of your data and processing in the hands of a third party (that includes business continuity).

Technically I don't see much difference from the current practice of having corporate data centres in remote locations. To some extent we have already gone in that direction with third parties providing data centre/server farm facilities............this just extends the devolution of control.

I can see problems with the next logical step, though, which is when the service providers try to maximise their profits by taking the actual provision offshore.

There is also the major issue of employee selection and vetting procedures?