Key challenges associated while working with subcontractors

• Difficulty in retaining knowledge: Subcontractors are not encouraged to document and handover knowledge. Usually, this is not even an expected Key Performance Indicator (KPI) for them. The current demand is for customers to work with an organization that can provide a mature and proven knowledge management system with world class tools. Proper documentation of knowledge has enabled organizations to create many reusable assets that will help reduce time during delivery and time to market in the future.
• Lack of handover: The 5-10 day notice period for releasing subcontractors does not allow for a sufficient handover of deliverables. Effective handover processes are also not employed during the handover, consequently impacting project delivery.
• Delayed response to market dynamics: Technology transitions in the field of Information Technology are quite common and an IT organization should be able to quickly respond to these transitions before the business is lost to competitors. Any changes to the client's IT strategy would involve change for the subcontractors too; this is generally difficult as they are usually specialists linked to a specific technology area. Organizations then must search for new subcontractors to align with their strategies, which can be time consuming, costly, and impact the Go to Market time.
• Low-cost effectiveness: Higher rates for subcontractors, compared with the internal staff or managed services cost, and combined with annual rate increases make subcontracting an expensive choice. In addition, there is the difficulty of knowledge retention, leading to an ongoing search for skills. When a new subcontract resource is identified, significant time is spent in training and grooming the resource to be productive due to a lack of handovers.
• Poor economies of scale: Subcontracting is often done for inpidual tasks and not for aggregated services, making it difficult to achieve economies of scale.