My goal for 2010 is to start my own web development business. However, I know I won’t be able to do all of the work to a suitable standard myself. That’s why I want to outsource some of it.
What are the legalities in outsourcing work, that I’m supposed to be doing, on Elance and oDesk? Do I have to make my client aware that I’m outsourcing some of the work?
You don’t have to, but you are fully responsible to the client for getting the work done right and on time. If one of your contractors is late or sends you a web design with someone’s personal Flickr photos and a stolen logo, you’re liable for all of that. If your client isn’t paying you, you’re still liable to pay your contractors for their work.
And that’s even more of an issue with places like elance and guru, those types of freelancer websites are effectively a bidding war-ground for eastern nations to get fast turnarounds and poor quality workmanship for bottom dollars. I have had experience with those kind of websites before as a freelancer and it’s not the kind of place I would go to employ people you can rely on for project work which your reputation rests upon. 
I don’t think one should generalize, I have found some good ones though Indian rather than Est European.
I never said east European, I said eastern nations, that includes India. I’ve had problems with Indian sourcing as well. Those kind of freelancer websites are nothing more than breeding grounds for the bottom dollar dwellers and every one of those freelance sites I’ve seen is full of fraudulent posts or job offers which are a budget auction until the price won’t go any lower (and the people offering the ultra cheap crazy prices are from eastern nations in 90% of all cases). Perhaps you’ve had some luck in finding freelancers to outsource to, but as someone from the other end (looking for clients and work) those kind of places are not worth the effort.
Com Driver,
Obviously you’ve found that virtual programmers are working well for you, or you wouldn’t have this problem and wouldn’t have this question…so I’m glad to hear that.
Some of the early versions of the virtual progammer services had issues with quality that Alex mentioned. Since then many have added the necessary quality control features (such as arbitration, deposits to guarantee delivery and ways to confirm hourly work) that buyers can reliably get their project according to specs, on time and on budget. For a comparison of the features across the different services, see:
www.rentacoder.com/RentACoder/DotNet/misc/VirtualWorkerIndustryComparison_ForBuyers.aspx
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Whoops, I didn’t complete my posting. There is no legal obligation to inform people that you are outsourcing. However I do recommend that you do this, so they understand timezone difference issues that may occur. This is not just a disadvantage, it can also mean that work can be done on their project around the clock. But the client will be happier if they know. Good luck.
Rod