This is one excellent reason why anyone going 'cloud' really needs to look at locally-hosted options. There's now a local presence for Azure but I don't think Office 365 is being hosted here currently. (Anyone know?)
You can also spin up EC2 instances in Amazon's local DC and Salesforce likewise has local instances but what about all the SaaS offerings running on top of these services - are these all run from local DCs?
Moving to the cloud does remove one part of the IT concern but the idea that you can just trust it blindly is of course foolish. I have seen people sign up to services and migrate all their data in - at significant expense and then only afterwards find that all their data is actually in another country and the latency is less than stellar.