The terms consultant, contractor and sub-contractor are not mutually exclusive and there is often overlap in when and where the terms are used.
The information below is provided in the context of consultants, contractors and sub-contractors being individuals that would typically provide services to SME businesses rather than larger organisations – for example a national company appointed by the government to undertake a major infrastructure project.
Generally speaking, consultants are self-employed, seasoned professionals who bring a wealth of knowledge and experience in a particular area and that is what they are being paid for. Consultants typically advise a client on what they should do but often don’t carry out the work themselves. Consultant is a term more commonly used with what some might describe as professional or ‘white collar’ services.
Again, contractors are self-employed, experienced individuals who bring knowledge and experience but do actually carry out the work themselves. They implement what the client has decided (either on their own or following input from a consultant) to do. Contractor is a term more commonly used with what some might describe as manual or ‘blue collar’ services.
Sub-contractors are usually engaged by a contractor and are undertaking providing work that the contractor doesn’t have the skills, experience or capacity to do themselves.
There are two main ways in which SMEs will use consultants, contractors and sub-contractors;
1) The SME engages a consultant or contractor to work directly for their business by supplying services to that business. In these instances, this becomes a supplier arrangement and will usually be governed by an agreement which the individual supplying the services provides.
2) The SME engages a consultant or contractor in a sub-contractor capacity – i.e. the SME is providing a service to their client but they wish to sub-contract some of that work out.