A Short Guide on Subcontractors

Know more about subcontractors, how subcontracting works, and its benefits.

a contractor and a subcontractor

What is a Subcontractor?

A subcontractor is a person, team, or business that is slated to do a certain part of all of another’s project or contract. Often, a subcontractor has a certain field of expertise or task that they specialize in and which is what they are hired for.

What is the Difference Between a Contractor and a Subcontractor?

A contractor, such as a general contractor or independent contractor, is an external person, team, or business hired by a client for a certain project or task. Similar to a subcontractor, they often have certain fields or tasks they specialize in, which is what they are hired for. In some cases, when the task assigned to the contractor may be too heavy for them to handle, they hire a subcontractor. 

However, in most cases, between a contractor and a subcontractor, only the contractor will have contact with the client. The contractor will then have two contracts: one with the client, and one with the subcontractor. Meanwhile, the subcontractor will only have one contract, and that is with the contractor. The subcontractor will then only report directly to the contractor, and thus, the contractor will be solely responsible for them. Contractors are responsible for fulfilling the contract with the client, not the subcontractor, who is only there to help them do so.

Why Do Companies Hire Subcontractors?

Subcontracting is a common practice in industries where complex and time-consuming projects are often carried out. A subcontractor is usually hired by a project or company’s general contractor, who will assume responsibility for them for the whole duration of their hire. Some fields where it is the norm to hire a subcontractor are construction, manufacturing, and information technology, as they have very laborious and time-consuming tasks. 

While it is not necessary to hire a subcontractor for long-term or intense projects, many prefer to do it as they find it more cost-effective in the long run. Rather than bringing in new employees for specific projects only, they choose to hire subcontractors instead, who they can employ on a per-project basis or as necessary, depending on their expertise or the situation. This arrangement also allows for more flexibility when planning for the project. 

What is an Example of a Subcontractor’s Job?

Some of the most common job examples for a subcontractor are related to:

Subcontractors are also common in the fields of information technology (IT) and advertising and marketing, where many employers turn to freelancers or agencies to lower costs. In recent times, it has become more common to outsource staff for these two fields as they are constantly evolving and often require lots of time and effort. 

Responsibilities of a Subcontractor

A subcontractor does almost the same things a contractor does unless otherwise specified in their contract. That is, they are required to keep their own paperwork documenting their processes and problems, work with little to no supervision, and manage their expenses. While these tasks should be done with the knowledge and supervision of the contractor, they are generally left up to the subcontractor for the duration of their job. 

Additionally, on-site safety management is also an important aspect of a subcontractor’s responsibilities. In some countries, such as the US, UK, and New Zealand, there are legal provisions in place to guide subcontractors in how to manage safety in their respective workplaces.

Some of a subcontractor’s responsibilities should always include:

  • Maintaining a safe and clean working environment
  • Identifying hazards and possible risks before, during, and after work
  • Observing assets, structures, and other items to make sure they are in working condition
  • Storing and handling materials properly and without harm to whoever is handling them and their environment
  • Providing essential facilities for the benefit of the workers’ welfare such as drinking stations, rest areas, and toilets
  • Keeping records of any incidents, identified risks, and possible issues for future reference 

FAQs about Subcontractors

Contractors only employ subcontractors if the project is too hard to complete alone, or if they deem that having one will improve the turnaround time. Some contractors can finish their projects without hiring one. 

Ideally, all subcontractors should have a contract in place before agreeing to work. Subcontractors generally only need a contract with their contractors. They often do not have a direct contract or agreement with the project manager. 

Outsourcing and subcontracting are similar in how they are about employers looking for workers outside of their own teams or businesses. However, there is a difference in their purpose.

Outsourcing refers to the business strategy wherein specific tasks in a company that are usually done in-house are instead being completed by an external or third-party entity. There is often a budget already allocated for outsourcing.

Meanwhile, subcontracting refers to the process of an outsourced contractor hiring another party to help them accomplish their tasks. Subcontractors only work with the contractor that hired them, but not directly with the entity who hired the contractor. 

Contractors can keep a subcontractor for any duration, as long as they agree upon it. Subcontractors can be hired for both long-term and short-term projects. They can also be hired by the same contractors multiple times.