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.

As the former CEO of an outsourcing marketplace, I have a different perspective than many of the people who answered here. I've seen firsthand too many entrepreneurs not understanding the nuances of outsourcing, and finding that their developer sells an exact copy to a competitor, runs with the idea themselves (ask the Winklevoss twins how their outsourcing of Facebook to Mark Zuckerberg went for them!), or goes to work with a better funded competitior (after learning on the entrepreneur's dime!). A key factor in the decision of whether to outsource or not is which country you're using. If your provider is in a country with weak intellectual property protection laws, then you need to understand that you probably have no recourse if any of the above bad things happen. Now, perhaps that's okay because cost is the most important thing to you, and the risk is acceptable. Or perhaps it's not, in that case you will want to keep some of your development in a country with strong laws. Some companies go with a hybrid model where the master integrator is in a country like the US, but the majority work is done by individuals in cheaper countries... none of whom have access to everything. I hope this helps. If you need more tips and techniques on how to outsource safely, just let me know.

Answered 8 years ago

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