Dependent contractors are self-employed and their incomes are dependent on one or a few firms. Dependent contractors are in charge of activities which are mission critical to the firm and require high levels of firm-specific knowledge. Because of the risks of production inefficiencies, quality loss, unauthorized use of corporate knowledge, and other such risks associated with outsourcing to external suppliers, firms tend to externalize the routine aspects of mission critical activities. Through presenting statistical information, self-employment growth rates, demographics, and industry and occupational breakdowns, this chapter provides an analysis about the features of dependent contracting and how both firms and contractors can benefit from such an arrangement.
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