Hiring process

It really all depends on the project. If this is something you want custom coded for your particular WP site, theme, or if you are running a lot of other plugins then your coder will need access to them all. If they are all free (not licensed to disallow sharing), then you can simply zip up the site files, and (depending on if you need database support for plugin) create a backup of the database and send both to your developer.

Once they are done they can send you back the whole pack and you can just use a program like Filezilla to upload the new files. Or, they can build it into a nice little uploadable plugin and you can just drop that into your site.

If you want this made as a general plugin you can resell/fit in to any wordpress site, then the developer can simply work from a standard Wordpress install, and be damned to any other plugins you want to run because you'll never get it to work with everything.

When doing work for others I personally prefer to work with direct access to the server. I can do all the developing well enough with just files setting up a wamp server, but that means squat when run on the actual server with different configurations and in real life situations. It all depends on circumstances really, but if you're not comfortable giving out your login information there are always other ways around it