There are many different types of subcontracting relationships and different ways to manage them.  You can use anything from a hands-off approach to a micro-managing approach.  Most companies choose a middle ground.  Certain industries need more oversight and control than others, but your best bet is to run the function in house for a short period of time to decide what needs to be done and how you are going to measure a successful relationship.

Managing Subcontracting Relationships

You need to be clear in outlining which party handles which details in order to properly manage subcontractors.  Before you outsource, you should figure out why you’re outsourcing.  Do you need additional capacity?  Are you lacking certain specialized skills?  Do you have short-term needs?  Do you want to save money?  Answer these questions to figure out how you will manage subcontracting relationships.

Subcontracting Agreements

You have to have your subcontracting agreements reviewed by a professional attorney.  If you are in the U.S. and hiring small companies to be involved in subcontracting relationships (individual consultants, etc.), you need to be absolutely sure the company is a legitimate independent contractors and not a statutory employee.  Check the IRS Web site for information about how to figure out subcontracting relationships.

Get advice from reliable counsel before you enter into any subcontracting situations.

Blogged By:  Joshua Feinberg

Be Aggressive

Solution providers in the IT world are often not as aggressive as they could be with partnering.  They may join a formal channel partner program from a major vendor – Sun, AMD, HP, IBM – and believe they are actually partnering.  In reality, you don’t start partnering as solution providers until you actually make contact with peer-sized companies.  You can’t really effectively partner with companies that are a thousand times bigger than yours.

Don’t Focus on Products

Solution providers often spend a lot of time looking for the latest and greatest in products and platforms.  A better use of time is looking for partnering opportunities with other solution providers and focusing on relationships with clients by trying to offer the most comprehensive services.

Strengthening through Partnerships

Those solution providers that are successful with partnering can really strengthen services.  When you use partnering, you offer a more comprehensive solution without investing a lot of money and time in building internal expertise.

Demand Generation and Partnering

Those solution providers that are successful with partnering strengthen their demand generation procedures.  Referrals from other solution providers speeds up the sales process tremendously because of the strength of such a recommendation.

Added by:  Joshua Feinberg