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If you HAVE TO outsource product development...

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 Nilesh Bhojani has some advise on the best practices in Yourstory:
Plan to spend at least a couple of hours on product development every day – answering queries from the development team on detailed requirements, reviewing and testing  progress, thinking about the next set of items to be built, reviewing and testing what has been done so far, and so on. If the product to be built is complex and the development team is bigger than 2-3 members, you might have to spend even more time. If you can’t commit that kind of that time, you must hire someone who understands the domain and someone you can trust – this person can be a bridge between you and the development team. If the development team is remote, this person should be local to you and he/she needs to have the authority to make day-to-day product decisions.

...Also, the development team working on the project usually notices a number of things that can be done different or better and this could be valuable feedback for you. But if it’s a fixed-bid contract, their focus is on “delivery”, not on “development”. You should go for an engagement-based contract if you want to build a good product and want to use the experience  of development team you are paying for. Go for a fixed-bid contract if short-term cost savings is your main goal.

 ...Every company has a few star performers: the rest are just good or average. In a bid to win a deal they might make you believe all their best people will work on your project, but that’s unlikely to happen in practice. Make sure you get a realistic team of good dedicated developers.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private company transactions, valuations and financials in India. Click Here to learn about Venture Intelligence products that help entrepreneurs Reach Out to Investors, Research Competition, Learn from Experienced Entrepreneurs and Interact with Peers. Includes the Free Deal Digest Weekly Newsletter: India's First & Most Exhaustive Transactions Newsletter.
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