Free US Law DictionaryBETA
A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract.
A subcontractor is hired by a general contractor (or prime contractor) to perform a specific task as part of the overall project. Whilst the most common concept of a subcontractor is in building works and civil engineering, the range of opportunities for subcontractor is much wider and it is possible that the greatest number now operate in the information technology and information sectors of business.
The incentive to hire subcontractors is either to reduce costs or to mitigate project risks. In this way the general contractor receives the same or better service than the general contractor could have provided by itself, at lower overall risk. Many subcontractors do work for the same companies rather than different ones. This allows subcontractors to further specialize their skills.
In the United Kingdom economy, the need to respond to a rapidly changing environment and service a diverse infrastructure has encouraged flexibility and diversity in its subcontractor community with the majority of subcontractors now providing specialised skills to a wide range of companies.