USING SUBCONTRACTORS

Subcontractors are usually paid only for the time they spend on fee earning work. This generates a contribution, being the difference between their daily fee rate and the rate that the client is paying. The related overhead is usually small. Subcontracting has further benefits including:

• It introduces some variability in the cost base. If the volume of sales decreases, you can reduce the amount of subcontract work before you have to consider cutting staff.

• Sub-contractors can be used to bring skills that are not available elsewhere in the consultancy.

The disadvantages of subcontracting are:

• Subcontractors may not be available when you want them, being engaged on projects for other principals.

• Subcontractors are not subject to the same control as full-time employees. This may present difficulties in enforcing a uniformity of approach and standard of quality.

• Subcontractors yield less profit than full-time staff.

The indications are, however, that consultancies are moving the same way as their clients, in that they will use subcontractors increasingly in the future. Indeed, some clients are now insisting that, although overall responsibility for a major project may be given to a large practice, they would expect to see elements of it given to specialist subcontractors and - in some major projects - the work to be conducted by a consortium. This is because it is unlikely that the best consultants or expertise for all elements are in a single practice or, indeed, that the work involved is restricted to consultancy.