Along with outsourcing, contracting and sub-contracting are two methods/techniques used for transferring certain jobs to outside agencies on contract basis. The purpose is to reduce cost and to get the routine and simple type of work done from other agencies so that time of internal will not be used for such less important as well as repetitive type of work. The practice of contracting and sub-contracting are used in production sector as well as in services sector. In building construction work, such contracting is quite common when the construction project is very big and is required to be complete within specific time limit. For example, a builder may give contract of colouring or tiling work or plumbing work to a contractor. He has to complete the work as per specification and will be paid as per amount fixed.

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Contractors may operate as independent contractor, general contractor or sub­contractor.

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