I was thinking about putting a web development company together. I would be responsible for the client management and I would use a company in India to do the development. What do you think?

A strong communication link is going to be key with your colleagues in India. Often things get lost in translation and I recommend that you sign up for skype or some other similar service so you can stay in touch while limitting your cost.

I think it is important that you have a strong relationship with the firm in India. We had to use several until we were satisfied with one. Fortunately it was just our work and not our clients.

I would be careful about becoming too enamored with the pay scale differences in the two countries. I think you will find that it is not as easy as you think to "outsource" your work. Many companies who have outsourced have brought their technology inhouse - JP Morgan being the biggest company to do so. Although they used a US company to outsource to they experience was still the same - underestimating management time and effort to oversee the relationship and losing control of the process

I think it is a great idea if you have good contacts. I guess the key question that you have to ask yourself is how are you going to differentiate yourself in an over crowded field. Having the lowest cost is not a sustainable strategy for a small business.

I would consider having some development staff in the US as well because you can take advantage of the time difference and if you get into technical problems or fast approaching deadlines you will have another resource to turn to. One place to look at is elance or guru for service firms.