Subcontractor

Subcontractor help achieve strategic objectives of company, by relieving it from the operational problems. By using services of subcontractors, company increases the freedom of doing business.==Objectives of hiring subcontractors==

• reduction of administrative costs, reduction in employment,
• cheaper and faster access to modern methods of doing business,
• use of technology and knowledge, which the company does not have,
• focus on the core business, through the transfer of certain tasks to subcontractors,
• reduce cost of investment in functions which do not constitute the core business of the company,
• risk-sharing between several companies.

Reasons for implementation

There are a number of reasons for hiring subcontractors. They relate to the complexity and high costs of personnel management, which company want to minimize or reduce. The most important are:

• ability to transfer company's employees to subcontractor, in order to reduce costs,
• ability to transfer assets to the subcontractor,
• ability to use highly qualified specialist personnel of subcontractor,
• ability to use technology inaccessible due to the high cost of their purchase and implementation.

Rules

The main condition that must be fulfilled for the purpose of hiring subcontractors is acceptance from the owners and management. It should lead to improvements in the efficiency of the company, in various aspects of its business: strategic, economic, market, organizational, motivational. Hiring process is done in the following phases:

• Selecting organizational objectives,
• Cost-benefit analysis
• Create a project schedule
• Choice of subcontractors
• Negotiating the terms of the agreement
• Information for staff about the new situation
• Development schedule for implementation
• Monitoring effects of implementation

Subcontractor — recommended articles

Transformational outsourcing — Tactical outsourcing — Strategic alliance — Downsizing — Management company — Business improvement — Business process outsourcing — Operational decision — Organizational progress

References

• Quinn, J. B., & Hilmer, F. G. (1994). Strategic outsourcing. Sloan management review, 35(4), 43.