Economic risks of subcontractors

For businesses acting as subcontractors for other companies economic life can be nasty, brutish and full of risk. Contracts are of short duration, profits are thin, competition is fierce and bankruptcies are frequent. Subcontractors have to scramble to meet ever more rigorous demands for higher quality, faster delivery and lower prices. They pay wages as much as one half of major companies. In order to remain competitive, some subcontractors hire labour at wages below the legal minimum. They offer working conditions that are frequently squalid and fringe benefits that are minimal to nonexistent. They are the first to feel a recession.