Deciding to subcontract is a big decision, whether you’re a business looking for an extra helping hand or subcontractor looking for more work. In this article, we’re going to discuss the pros and cons of subbing for tradies, so you can make a more informed decision.

What is subcontracting?

Subcontracting is a common business practice that lets companies outsource specific tasks to independent contractors or specialist firms. 

But is it always the right move? 

Whether you’re a business owner looking to scale or a skilled professional considering how to become a subcontractor, understanding the advantages and disadvantages of subcontracting is key to making it work for you.

Industries worldwide rely on subcontractors from construction to IT. They use subbies to streamline operations and access specialised expertise. But while subcontracting can be a game-changer when you’re trying to grow your business, it also comes with risks. 

Let’s break down what subcontracting means, when it makes sense, and the pros and cons to consider before diving in.

Common industries and scenarios for subcontracting

Subcontracting is widely used across industries, including:

• Construction and trades – Bricklayers, electricians, plumbers, and painters frequently operate as subcontractors on major projects.
• IT and software development – Companies outsource specialised coding, cybersecurity, or network management to IT subcontractors.
• Manufacturing – Businesses contract out components of production to third-party manufacturers.
• Marketing and design – Graphic designers, content writers, and digital marketers often work as subcontractors on a per-project basis.
• Logistics and transport – Subcontracted freight drivers handle deliveries without businesses needing to invest in their own fleet.

The decision to subcontract if you’re a subbie.

If you’re wondering how to become a subcontractor, it often starts with getting licensed (if required in your trade), setting up an ABN (Australian Business Number), and securing contracts with businesses that need your skills.

The decision to subcontract if you’re a business.

Deciding to subcontract isn’t just about outsourcing work—it’s about strategically expanding capacity, improving efficiency, and leveraging expertise that you might not have in-house.

For businesses, subcontracting lets you scale up quickly without hiring permanent employees. For tradies, being a subcontractor can mean greater freedom, higher earning potential, and the flexibility to work across multiple projects. But, like any business decision, it requires careful planning.

So, when does subcontracting make sense? If your business has workload fluctuations, skills gaps, or needs a cost-effective solution, subcontracting might be the answer. However, you may need to weigh the risks carefully if you’re concerned about quality control, reliance on external providers, or confidentiality issues.

The pros of subcontracting.

Steady work.

If you’re subcontracting full-time to one or more businesses on a long-term basis, you don’t need to worry about finding new clients. This can allow you to build up your experience and learn the ropes of running a business without the extra stress of having an ongoing supply of work.

Higher pay potential than company employees.

If you can secure a higher hourly rate, then subbing could lead to a significantly higher income. Just keep in mind that as a subbie, you don’t get paid for public holidays, sick days or accrue annual leave. So, you’ll need to factor that into your hourly rate.

A chance to improve your skills.

Subcontracting can also allow you to learn new skills and gain experience in areas that you may not have had the chance to work in before. This is especially beneficial if you want to expand your services.

Lower operating costs.

If you’re subbing for another business, you don’t need to do your own business’s marketing or project management costs, so you can keep your business expenses lean.

Greater flexibility.

One of the biggest benefits of subcontracting is that it allows you to remain flexible with your business operations. You can take on short-term or project-based work or at reduced hours, which makes for a great work-life balance. This means you can choose when you want to work and how often – you can take extended holidays when you want. You can even choose to work across different locations around Australia and abroad – providing you have the appropriate trades licence to do so.

Access to specialised skills and expertise.

One of the biggest benefits of subcontracting is access to highly skilled professionals without needing to hire them full-time. Businesses can tap into niche expertise as needed, improving project outcomes.

Flexibility and scalability for your business.

Need extra hands for a big project but don’t want to commit to long-term employment contracts? Subcontracting allows businesses to scale up and down based on demand, keeping costs lean while ensuring work gets done.

Cost savings and efficiencies.

Hiring full-time employees comes with costs—wages, benefits, training, and more. Subcontracting offers a cost-effective alternative, as businesses only pay for the work performed.

Focus on core business activities.

Outsourcing tasks lets you focus on what you do best in your business. Hiring a subcontractor frees up your time and resources, whether that’s strategic planning, product development, or client relations.

The cons of subcontracting

Lack of control over projects

When working as a subcontractor, it’s important to remember that you don’t have complete control over the job at hand. You’re essentially working for someone else and doing what they tell you, which means there can be some uncertainty around how projects will turn out.

Your revenue can be limited.

While you can earn more as a subbie than as a trade employee, you still don’t get as much pay as if you were working directly for clients. This is because whoever you’re subbing to will need to take a cut of our hourly rate to pay to factor in their own business expenses and profit margin.

Potential quality control issues

When you outsource work, it can be challenging making sure you maintain its quality. Subbies often work independently, which means you’ve got less control over how they complete your tasks.

Potential confidentiality and security breaches

Sharing sensitive company information with external providers carries risks. If not properly managed, subcontracting can expose businesses to security breaches, data leaks, or intellectual property theft.

Dependency on subbies

Relying heavily on subbies can backfire if they become unavailable to work or don’t meet deadlines. You could suddenly be drowned in more work than you can manage within the original deadlines. It’s a good idea to always have a contingency plan to mitigate these risks.

Possible impact on company or team culture

A strong business culture is built on teamwork, shared values, and long-term relationships. Bringing in external subbies can sometimes disrupt this, particularly if you don’t manage the process and transition well.

Being a subcontractor is a fantastic option if you don’t want the stress of running a trade business but want more flexibility than being an employee.

Just remember to do your research. Make sure you’ve fully vetted your working terms and conditions, and get the right contracts in place to protect yourself.

At the end of the day, it’s important to weigh up all the pros and cons before deciding on subcontracting. Armed with this information, you can make an informed choice about how best to move forward for your business.

Key factors to consider before subcontracting

Before hiring a subcontractor (or becoming one), you should consider:

Evaluating your business needs and goals

Is subcontracting essential for growth, or could hiring an employee be a better long-term solution? Assessing your goals will help determine if subcontracting aligns with your business model.

Assess your subbies’ reliability.

Not all subbies are created equal! Check credentials, read reviews, and ask for referrals to ensure you’re working with trustworthy professionals.

Understand your legal and contractual obligations.

Your subcontracting agreements should be clear and legally sound, outlining payment terms, deliverables, confidentiality clauses, and dispute resolution processes to protect you and your employer/employee.

Consider long-term implications.

While subbies offer immediate benefits for your business, it’s essential to consider long-term impacts—especially if you think you’re likely to become too dependent on external providers.