Eric Ries intimated in "Lean Startup" that nobody would steal our ideas, but I have concerns with an external agency or developers having possession of source code that would be the core of our business. Is this an unfounded fear? When funding permits, I would like to explore having an in-house development team, but quality agencies and developers seem to be available to hire in abundance. If my startup is bringing in revenue and profiting, is it unusual to continue a working relationship by outsourcing development to a third party? I'm thinking in the most economical sense, that this is sensible, however there are certainly other concerns to consider.
Instead of outsourcing development, take those people on directly as remote employees. If you're doing anything more than a multi month project the costs are significantly cheaper (2-3 times cheaper than outsourcing it to a firm) in comparison to taking those developers on full time. I personally would not 'outsource' core development as you'll need them for years afterwards. Let them stay remote but take them on full time.