Marketing91

  • HOME
  • Marketing Concepts
    • Marketing
      • Retail Tutorials
      • Market Research
      • Customer Management
    • Strategy
    • Management
    • Advertising
    • Branding
    • Business
    • Finance
    • Sales
    • Career Guidance
  • Digital Concepts
    • Blogging
    • Search Engine Optimization
    • Social Media Marketing
    • Facebook Marketing
    • Internet Marketing
    • Ecommerce
  • Brands
    • Marketing Mix of Brands
    • SWOT analysis of Brands
    • Brands Strategy Analysis
    • Business Models
    • Brand Competitors
    • TOP 10
  • Courses
Home » Business » Subcontracting Definition – Why should you hire Subcontracters?

Subcontracting Definition – Why should you hire Subcontracters?

January 30, 2020 By Hitesh Bhasin Tagged With: Business

Subcontracting is defined as a practice of outsourcing a part of a task to another party who is known as a subcontractor through a contract. In other words subcontracting is a process where a company assumes a secondary contract for some or all of the obligations of the original contractor.

Table of Contents

  • Meaning
  • Reasons for subcontracting
    • 1. Help in large projects
    • 2. Cost-efficient
    • 3. Meet deadlines
    • 4. Flexibility
    • 5. Increased productivity
    • 6. Access to specialized skills and know-how
    • 7. Ensure quality
    • 8. Maintaining brand name
    • 9. Spreading the risk
  • Advantages of subcontracting
  • Disadvantages of subcontracting

Meaning

Subcontracting is quite common in complex projects like Information and technology and construction industry. The general contractor of a task or a project has the responsibility of recruiting a subcontractor if he deems it necessary.

Reasons for subcontracting

Reasons for subcontracting

The reasons for subcontracting are as follows

1. Help in large projects

Business entities require subcontracting in diversified and large projects that need additional expertise. The subcontracting team is a valuable resource that helps to take on a more significant project and large clientele. It creates a customized team and provides additional helping hands for specialized contracts and projects

2. Cost-efficient

Recruiting a full-time team to handle extra or dedicated work will incur hefty expenses because it means paying their salaries year-round and providing benefits that are due to every employee. At such a time subcontracting proves cost-efficient especially if the task is seasonal and not permanent.

3. Meet deadlines

Trying to accomplish a task for which you do not have the required resources or skill will take much longer, and it becomes impossible to complete the work in a given timeline. On the other hand, subcontracting a specific task helps the company to meet deadlines which otherwise would not have been possible for it.

4. Flexibility

Recruiting permanent staff is a lot of work and additional expenses. If the hired new employees are not up to the mark, the company has to provide them with training to improve their performance levels.

This means further expenses. Subcontracting is offered to a party that has established itself. You know that it has the ability and resources to handle your work and you can terminate their services once the job is finished. This is why subcontracting offers the required flexibility to the company that hires it.

5. Increased productivity

Sometimes, a business entity is unable to focus on the growth and development of its company. It is instead bogged down by mundane and tedious tasks like paperwork etc. Subcontracting is not only for getting specialized skills and know-how because a company can offer subcontracting to meet the necessary mundane tasks in its organization.

6. Access to specialized skills and know-how

One of the essential reasons for subcontracting is to get prompt access to specialized skills and knowledge. Some projects need special services at some critical point in the project like an engineer, digital artists, photographers, legal advisor or web developers.

Hiring a permanent team or even an individual to handle it will incur expenses that will be waste when the services are no longer required. Subcontracting, on the other hand, gives a company an option to hire a specialized service for only that duration and terminate it once the work is done.

7. Ensure quality

The subcontracting team that a business hires are generally experts in their field who guarantee the quality of its delivered product and services along with a budget, criteria, and expectations. Some jobs need specialized equipment, tools or human resources that are very expensive.

It is not feasible for a company to buy or recruit them permanently. Subcontracting saves you from this trouble and expense and this is why it is better to hire them because they will also ensure quality.

8. Maintaining brand name

Missed deadlines and shoddy quality work is enough to ruin the name and image of a company. It is better to hire a subcontracting team when required to preserve both the name and image in the market.

9. Spreading the risk

Relying on a subcontracting team helps the contractor to spread the risk from his business to another. The shared responsibility lessens the exposure to risk from an insurance point-of-view. This helps in negotiating better premiums and coverage from the insurer.

Advantages of subcontracting

Advantages of subcontracting

The advantages of subcontracting for your business are as follows-

  • Subcontracting helps to adapt to the varying cycles of demand
  • Subcontracting keeps the overhead and labor costs low
  • Subcontracting limits your capital investments by having access to capital equipment and skill upgrades without incurring financial investment
  • Subcontracting helps to gain specialized labor outside the core business
  • Subcontracting controls additional costs
  • Subcontracting helps the hiring company to focus on its strengths

Disadvantages of subcontracting

The disadvantages of subcontracting are as follows-

  • A business entity is unable to develop in-house skills and know-how when it starts depending upon subcontracting for it
  • There is no direct control over the subcontracting team and can result in poor work or product quality
  • Subcontracting is an additional expense for a company as payment per hour is higher
  • There is less commitment from a subcontracting team compared to other employees

Share this post:

Share on Facebook Share on Twitter Share on LinkedIn Share on Email Share on WhatsApp
Digiaide Marketing and Digital Marketing Courses

Related posts:

  1. What is Business Case? – Meaning, Structure and Template
  2. Sole Proprietorship
  3. Outsourcing – Definition, Reasons, Tips, Pros And Cons
  4. What is Company Profile? Definition, Meaning, Importance
  5. Public-Private Partnerships – Meaning, Advantages and Disadvantages
  6. How to Write a Business Plan?
  7. What is Corporate Image and why it is so Important?
  8. Contract Manufacturing: Definition, Meaning, Advantages, Examples
  9. How To Get A Business Credit Card? Steps To Get A Business Card
  10. Best 8 Types of Business Ownership

What Do You Want To Learn About? (Start Here)

  1. Marketing Hub
  2. Management Hub
  3. Marketing Strategy
  4. Advertising Hub
  5. Branding Hub
  6. Market Research
  7. Small Business Marketing
  8. Sales and Selling
  9. Marketing Careers
  10. Customer Management
  11. Top 10 Lists
  1. Internet Marketing
  2. Blogging
  3. Search Engine optimization
  4. E-commerce
  5. Facebook Marketing
  6. Social Media Marketing
  7. Business Model of Brands
  8. Marketing Mix of Brands
  9. Brand Competitors
  10. Strategy of Brands
  11. SWOT of Brands
GET DAILY MARKETING UPDATES

About Hitesh Bhasin

I love writing about the latest in marketing & advertising. I am a serial entrepreneur & I created Marketing91 because I wanted my readers to stay ahead in this hectic business world.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement
Recent Posts
  • Collaboration – Definition, Importance, Types and skills
  • College vs University – Differences, Types, Pros and Cons
  • Common Stock – Definition, Classification and Examples
  • Common Market – Definition, History and Examples
  • Commodity Futures – Definition, Example and Risks
Advertisement

Marketing91

MORE INFO

  • About Marketing91
  • Privacy Policy
  • Cookie Policy
  • Disclaimer
  • Terms of Use
  • Advertise
  • Contact us
  • Sitemap
  • ISO 9001:2015 Certified

LEARNING SERIES

  • What is Communications
  • Types of Communication

WE WRITE ON

  • Marketing
  • Small Business
  • Management
  • Internet Marketing
[email protected]

Copyright © 2022 Marketing91 All Rights Reserved