Monday, September 22, 2008

Hiring Outside Developers: Doing it Right

Increasingly, start-ups are outsourcing the basic coding work for a product to others – either to one or two consultants who might join the business if the project advances, or to a larger business. I know many of you like to do these yourself,using some precedent from your last start-up, but if you could humour me and consider some of the subtleties below, it would really help things down the line. Whether you've outsourced to a guy working from his guest bedroom or a larger code shop, make sure you've considered the following basic protections:

1. Chain of Title: make sure the assignment of deliverables language is broad and encompasses all aspects of the work(the specifications, the documentation as well as the code) and all categories of intellectual property rights.

2. Tax Credits: Ask your developer to assign all rights to SR&ED and similar tax credits so that there is no dispute as to who can claim them.

3. Source Code Drops: To avoid the captive supplier syndrome, make sure you are receiving regular source code drops during the development phase – don’t wait until the last deliverable has arrived and there’s a dispute about acceptance and payment. Source code drops every two weeks during the development phase are desirable on core projects. You should make sure that the drops include linking, compiling and building instructions and any embedded programmer notes, if applicable.

More later.