Subcontracting vs. Referral

Question: When do you refer rather than subcontract and vice versa?

Response #1: I subcontract when a client needs a service that I don’t perform as part of the scope of work. Typically, that’s graphic design/production. I have also subcontracted video production and occasionally writing when I needed extra help. I may refer business to a colleague when a prospect that I don’t know calls and I’m too busy to help, or when a client or prospect is looking for a service I don’t provide.


Response #2: I will refer rather than subcontract if (1) I don’t know enough about the person’s work to have complete confidence in their ability to make the client happy; (2) I am too busy to take on project management/quality control (I wouldn’t turn in someone else’s work without looking it over first); (3) the client has a very limited budget and can’t support a markup of the subcontractor’s rates (I will never subcontract if I can’t mark them up — no point in taking on the added risk if there isn’t a financial payoff).


Response #3: I refer colleagues when I’m not in a position to add value to the project. I would rather refer and reap the goodwill than try to subcontract a contractor who doesn’t need any help or support from me. On the other hand, if a client wants me to put a team in place and provide services, management oversight, or any other level of value added, I bring the contractors on as subcontractors.