The key benefit with subcontract personnel is that they can easily be added to and removed from the business.
This abilitiy can be very useful for a dynamic business expanding quickly, or operating in a volatile market.
Using subcontractors can also be a good way for adding expertise into the business. This can be for as long as you need it and no more.
The subcontractor can be brought in to contribute to a specific project rather than as a full time employee.
Adding new personnel of any kind always brings with a risk that the service quality level will not be up to the normal business standard.
Of course the recruitment process is important here, but so is good documentation and other procedural tools that can be used to make sure the output is at the right quality level.
Having a reliable source of subcontract personnel is vital. For many cases it is better if the occasional subcontractor knows your business.
If the subcontractor comes from a pool of workers or is a freelancer you have not worked with before, there is always an inherent risk.
While the sanction of withholding payment is always available, this is usually after the fact and the damage may already have been done at that point.
There is nothing etched in stone that says that everyone that works in a business has to be directly employed by the business. Some very big businesses indeed these days have a substantial percentage of subcontracted, self-employed people working for them.
A famous example is Uber, a company that operates on the basis that most of its drivers are self employed. Uber is a framework that makes the transaction between the service deliverer (the driver) and the customer possible. It then takes a cut of the fee to cover the cost of the service offered.
Where the controversy comes in is where the drivers do nothing else but work for Uber. The argument then goes that the drivers are employees in all but name and so should have the full rights of real employees such as holidays, sick pay, etc.
It is not for us to make a judgment, but one thing to note is that for tax purposes this sort of arrangement can be problematic for both parties. So, if this model is to be followed, the subcontract employees need to be able to work for someone else from time to time and it is better for both parties if they do.
The trick is to ensure you have an operational framework that can add subcontract personnel quickly into the mix without compromising service quality.
We can draw on Uber again for their approach which asks the customer to evaluate the driver independently. This very neatly creates an implied disassociation of the driver from the main company while incentivising the driver to deliver the best possible service.
While there are other complexities that need to be considered (such as criminal records), it can be seen from this simple model how it is possible to reduce the risks to the business associated with using subcontract personnel. This is from both a reputation and sourcing standpoint.
However, it is not good enough to bring on a new subcontractor and tell them to 'be nice to the customers or else'.
You also need to back that up with good procedures, instruction/guidance and quality assurance to remove the uncertainty around what the subcontractor interprets as being 'nice to the customer' really means.
