Sub-Contracting

As more people opt (more like “forced”) to find contract versus full time jobs, they are discovering first-hand the pros and cons of such a move. Prior to the past century, most people worked as freelancers. Industrialization and the Great Depression created a sense of security with full-time jobs.

The trend for contract jobs is going up again and 1 in 4 working Americans is a contractor, compared to 1 in 5 a couple years ago. It seems like a win-win situation where a worker can find a paying gig while businesses ensure capacity flexibility. In reality, contractors take a big risk given that they are the first expense line item to be cut during a downturn. Also health-benefits and self-employment tax creep up very quickly.

As for companies, the downside is more strategic. Most organizations do not know how to differentiate between core competencies and supporting capabilities. While outsourcing or sub-contracting the latter is usually a smart decision, applying this strategy to a core competency could be detrimental to your business. There is still a need for in-house and permanent expertise to maintain and improve on core competencies.