Let me approach it from another angle:

If your the Founder or even the startups Tech Lead you need to outsource the development to a software dev partner who had deep experience and focus in your segment and tech stack, working with clients like you (size, culture) in locations like yours and meeting other criteria you deem important to the success of the dev effort (cost, size of partner, certifications, global location, language proficiency are a few).

Why? Because 1. Investors and the market shows no mercy in ISVs in a hyper competitive marketplace that are not laser focused on envisioning the best product possible and then evangelizing, marketing, selling and funding its future's success.

The more cycles you spend building an "organization" and running non-core functions like accounting, legal, HR, Software development (yes Dev too), the less you are spending evolving and promoting your "widget". Even a software product company is NOT a software services company. Finding and engaging the right software development partner that is perfectly (or well) aligned with your requirements and success criteria will provide you benefits such as fast and flexible team ramp up and ramp down, cost efficiency, knowledge base of innovation curated from other tech engagements, the relief of searching, hiring, training, retaining and down scaling this function internally, speed to market, best practices such as Certified Scrum leadership and more.

If you can source and perform due diligence smartly you can de-risk the intimidating aspects of global outsourcing and you can reap the benefits.

This isn't to say you hand over or don't control the core product IP and vision. It's just that you don't carry the burden of creating a world class dev shop from scratch.

Do (all!) this and investors and the market will more likely love you.

Feel free to reach out if you need more guidance

Andy Hilliard
President
Accelerance Inc.
Mobile: (704) 649-1087
Skype: ahilliard2
LinkedIn: Connect with me
Web: www.accelerance.com
Palo Alto, Charlotte, Chicago, NYC, Phoenix, Amsterdam

If it's a client you want to work with and this is part of the client's requirements then yes, you should allow this or politely decline the business. The client has the right to ask for anything and you have the right to approve or decline. I ran an offshore software services company in Costa Rica after being a Division Manager at Cognizant and now I advise and work with 50 software companies in 25 countries and this is a common request that is complied with. This isn't to say you shouldn't make the reasonable argument that it is preferred that interviews are conducted just with team leads who will then vet and manage the rest of the team. Even though you recruited, vetted, hired and trained your employees, the client wants to validate that your standards and definitions of capabilities are in line with theirs. That is a reasonable exercise assuming you want the business and you feel that this investment of time and validation will lead to a long, fruitful relationship.

For a legitimate small to mid-sized software development shop that focuses on RoR (you don't want too large a firm that won't treat you as important and you don't want a firm that says they do anything and hires to your specs) you should pay 20-30 (US$) in Asia, 25-35 in East Europe and 30-40 in Latin America. The key is to make sure they are experienced and passionate about Ruby, large enough to scale but small enough to care, they can leverage experience to maximize your efficacy, their culture matches your expectations, they have proven agile best practices, they are ethically and financially vetted, there are safeguards to protect your IP and they have business continuity processes. Those are the key factors.

We help companies, primarily startups, ISV's, small and mid sized companies select the right offshore Software dev company for their needs. We've assessed over 1500 such small to mid-sized service providers and currently we have 45 such partners in 24 countries. 12 are assessed expert in RoR and 13 are assessed experienced in RoR.

Our matching service is Free to clients. Your relationship will be direct with your partner and you will negotiate and expect to pay the above prices directly with your partner. We earn commission but because we are matching you up with an ideal fit, the service provider's risk is lower and thus you can expect to pay globally competitive pricing while working with a truly legitimate, assessed, professional software development partner.

Let me know if we can help.

Simply, there is no right or best country. Every start-up or company is different. The success criteria is unique to every circumstance. Each case has hard and soft criteria that is unique to them. That's why, and not to sound too sale-ay, my company helps companies, probably like you and ISVs and Start-ups outsource software development through our free, proprietary Accelerance Partner Matching System. We've assessed over 1,500 global software service companies, each of which have between 50-800 resources and, “are large enough to scale while small enough to care”. Today we have about 40 Accelerance Certified Expert Software Development Partners in over 20 countries!

Yes, 20 countries and certain locations within those countries chosen with such criteria as globally competitive pricing (e.g., $20-40/hr), under-leveraged yet deep talent pools, highly regarded education systems, political and macroeconomic stability, low employee turnover, strong experience dealing with Western clients (US, Canada, West Europe, Australia...)

Personally, I was a Division Manager at Cognizant since before they were 1,000 people (now they are 180,000!). I Founded, ran and sold a 200 person development shop in Costa Rica. Today, we have successful partners in Argentina, Vietnam, Costa Rica, Ukraine, Nepal, Peru, Belarus, Bolivia, Uruguay, Hungary, India, Mexico, China, Colombia, Romania, Venezuela, Armenia, Philippines, US, and a few others coming on line soon.

This free eBook might help add some insight to your inquiry: http://www.accelerance.com/images/downloads/Rapid%20Referral%20Process%20ebook.pdf

Hope this helps!