What is the difference between a subcontractor and an independent contractor?

Answer 1

A consultant would do research and give advice on a job, a subcontractor would actually do part of the job. Most modern manufacturing is done using many subcontractors to build everything necessary to make a car for instance.

Answer 2

The terms consultant and specialist are often interchanged. However, in an industry such as the medical field the terms can mean two very different things such as a specialist in a certain area of medicine and a consultant referring to a person who works as an independent contractor.

Answer 3

"Outsourcing" refers to sending a piece of work partially or fully to some "external" agency who specialises in the same. For example, a small firm (say, "A") may not find itself comfortable in managing its accounts, so may outsource it to a specialised accounting firm (say, "B"). Please note that at some point in time, firm "A" may realise that it has suficient volumes that it can own a center specialising in that activity - say, firm "A" becomes so large that having a dedicated team of accountatnts is profitable or convenient vis-a-vis outsourcing it to firm "B". in some instances, it may - this is called a CAPTIVE (or internal) center - but this is NOT "outsourcing" as nothing is going "OUT".

Now this firm "B", to further reduce its cost or for any other reason, may further give it - partially or fully - to another firm (say, "C"). This is "subcontracting" - IE. - contractor to a contractor. At times, the "outsourcer" (firm "A" in our example), bars any subcontracting; at times, in the absence of a clear clause in the contract, the contractor (firm "B") subcontracts it with or without the knowledge of the "outsourcer" (firm "A")!

Typically, on achieving a critical mass, any outsourced service provider (firm "B") will never ever resort to subcontracting, though it may initially work when the Contractor is "small"..

In a nut shell, outsourcing works only when:

1. It is either too complicated to handle by yourself as it requires sophisticated technical skills to handle by yourself And/ OR

2. It is too small - but still significant volume - to make a business sense to outsource.

Just to elaborate, one would "outsource" the drawings of a house to an architect (special skills, though task may be small) OR constructing a big house/ mansion (too complicated to handle by self PLUS technical skills) OR building a boundary wall (size or effort justifying "outsourcing"). Note that in some instances, one may still try to execute a task or activity by himself, so there are no hard and fast rules!

Also note that hiring daily wage workers (masons etc) by yourself is NOT "outsourcing" or "subcontracting" - both these terms attract service clauses attached to them ("X" amount of delivery in "Y" Dollars within "Z" days, etc etc..).

Answer 4

A subcontractor may also be an independent contractor.

A subcontractor situation happens when an employer places a contract with a person (or company) to have some work done. If that person (or company) then places a contract with another person (or company) to have all or perhaps a specialist part of the original work done, then that second person (or company) is a subcontractor.

From the employers point of view, he only pays the person he has a direct contract with.