Business Strategy

Questions about subcontracting work to larger firms

Altaf Sayyed Diversity-focused, forward-thinking experienced IT executive with a humanist, global perspective

November 29th, 2018


I run small software development company which normally works on outsourced projects. Experienced developers have mentality to select big firms. So to maintain quality of the work, I normally subcontract project to my development partner companies who are big firms.

I have following queries:

1. Is it advisable to directly connect my clients with development partners for smoothly running project?

2. Should I mention my development partner name in Service level agreement with client?3. Because of local taxes foreign direct income is always more beneficial. In total project cost, major share is of development partner. What is option where I will ask client to directly transfer specific amount to development partner directly when service agreement is with my company?


Thomas Fraser Entrepreneur

November 29th, 2018

Regarding the Sub:

In instances where there are technical discussions, it's not a bad idea to include the sub as a consultant to the meeting. It's a bad idea to create a way for the client to meet with your team directly. You are being hired to manage the project, keep it on budget, ensure quality, etc. When the client goes straight to the sub, you've been removed from the loop.

In an environment where you're being filled in on what everyone else has decided to do, you are not conducting your symphony.

Regarding the tax/payment concern:

When a client knows the exact amount going to the sub, and the amount you take, it makes negotiations more difficult. You should consult an attorney, and an accountant for advice on your local laws.

Paul Garcia marketing exec & business coach

December 6th, 2018

Thomas offered some good advice. So it seems to me your company is not a software development company, rather it is a brokerage for managing development projects. Instead of focusing on where the developers are from, perhaps it would be to your advantage to describe the ways in which you deliver value to your clients.

Managing a team of remote developers itself can be a daunting prospect. Keeping things on-time and on-budget and knowing how facilitate clear communication between technical and non-technical teams is a skill. The process of selecting developers, testing their skills, and quality control are often things companies wish they could avoid as part of the process.

There's nothing wrong with not being the developer. Decide what your company really is, and sell that differentiator. If you manage software development project details so companies don't have to worry about the results of outsourcing, and you can hit a middle ground between cheap and easy, then you probably have a sweet spot in the market.

Thomas Fraser Entrepreneur

February 17th, 2019

John OHanlon That's the most ignorant statement I've come across on this site. You either didn't read the material, and/or make assumptions. Additionally, for the record, subcontracting is a standard practice and there is nothing disreputable about it.

Anton Yakushin Cofounder & CTO of Software development company

Last updated on February 18th, 2019

If you don't want to deal with project development and just delegate all the work to another company, it's ok to directly connect client to that company and only take some fee for the contract (something around 5-10%). In this case you are dealing as a sales person which found a client. The client doesn't need to know anything about your fee.

John OHanlon Owner of Banks Printers

Last updated on November 29th, 2018

If you try to keep it secret from your clients when they find out many will boycott you. Better to tell them from outset it would be more cost effective and a better service to outsource.