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Times have changed, for small projects you can still outsource but anything serious have someone come into your office.
As far as countries go I dont think that matters there is good and bad everywhere.
Avoid elance at all costs as they do not have a good system in place to protect the buyer. RAC is the best when it comes to arbitration and trust me dealing with programmers that happens allot.
Here are some common sense things to do when hiring off RAC or other sites that protect the buyer.
a) if your work involves PHP and MYSql look for those with recent as in past 6 month completed jobs within that skillset. 150 positive feedbacks about how great he was and how fast and ontime he was related to html and JS jobs wont do you any good.
b) explain you have a deadline that under no circumstances can be missed and missing of those deadlines will result in the cancelation of the project with no exceptions. NEVER allow anyone to work with a open ended deadline, you do that and you will always regret it.
c) Do not work with companies, work with developers directly, if your project is so big that it needs a few people, hire locals. If the repy starts with "We are a team in india..." delete that right away.
d) KEY POINT: if at all possible pick out the most difficult part of your project and try to find a developer for that and if he was good use him for other stuff. For example a basic ordering system for a site and a database and user management e commerce type stuff a million people can do, but that complex new thing you like to do, maybe some special online java app maybe something that uses special drivers whatever it is get that out of the way first.
e) If you dont live by rules and are the emotional type a simple project like a contact us form can take a few years. Missed deadlines should always regardless of excuse result in immediate termination, be upfront about that policy or they will take on new clients and push you to the back. On RAC you can make those deadlines clear and if the programmer fails you keep your money.
f) Get a phone number, a gtalk/aim/yhoo etc messenger contact to them
g) No visual updates = nothing was done! There is no exception to that rule. Obviously the day after a developer starts he might not be able to show much but if you cant see some sort of changes daily he didnt do shit! The day a programmer says that the reason he cant show you any new things for the past week is because hes "debugging" fire him, no exception! BE upfront that on a daily basis he needs to upload his work and be in touch.
Good honest hard working developers will not be scared of the above, I have many years of experience getting shit done and I have a formula that works, the moment I dont follow these rules I lose!
PS. No developer can read your mind, if you dont have a program like EDDraw etc to draw up exactly diagrams and details of what you want, take a pen and paper and do your best. The more you show the better and quicker they can understand what you need.
I always draw things out and it makes the project go quick, a picture is really worth a 1000 words when it comes to getting things built.
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