Best Practices for Working as a Subcontractor

Best Practices for Working as a Subcontractor

The following is our guidance on how to handle situations where you are requested to subcontract to another organization.

(Almost) Never Subcontract

Sometimes an IT department or another consultant may want to hire you to perform work for them instead of having the client hire you directly.
We generally recommend never accepting a job that involves you working as a subcontractor for the following reasons.

Expectations will be lost in translation

In many subcontractor scenarios, a project manager will talk with the client, get expectations, and then attempt to communicate them to you.  This often results in important details being missed or correct expectations not being set.

You will not be compensated fairly

You will likely be asked to either bill hourly or on a fixed fee basis.

If you bill hourly, you'll likely spend more time communicating through the project manager than you will doing the work.  You'll get frustrated with the process and only receive a minimal paycheck from the project.

If you bill fixed-fee, it makes it difficult for you to renegotiate with the client if they request changes.  By committing to a fixed fee, the project manager will likely commit you to an increasing number of seemingly minor requests that complicate the project and cut into your profitability.

Instead, Pay a Generous Referral Fee

We generally recommend that if another person brings you business that you pay them a generous referral fee that varies based on the amount the client pays you.  In this way, the finder is incentivized to bring you more projects and they don't feel like they are completely missing out on work that they could have billed for.

Only Subcontract under a limited scope arrangement

If you want to accept a subcontract opportunity, we recommend only doing so under a "pull" arrangement.  For example, you might say:
"For $8,000 I will provide you with a backup of the data in such and such system.  It will be your job to restore it into the destination of your choice."

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