Introduction
There are many benefits that a company can get as a result of using independent contractors. Some of these benefits include a reduction in the amount of money used as these contractors are not paid such employment benefits as retirement benefits or health risk benefits. On the other hand, there are also risks associated with this and it is therefore important to weigh both benefits and risks associated with this.
Risks and Issues which the contracts with the independent contractors should address to protect as much as possible the interests of Information Technology Company
Technological ideas are very delicate for implementation by business entities. This is especially the case bearing in mind that a lot of organizations have now embraced information technology. Before an idea is completely developed, it needs a certain level of protection to ensure that someone else does not develop it faster than the inventor. When a project has to involve many contractors, it becomes even riskier hence requiring protective measures to be employed. Some of the risks involved may be the possibility of the contractors secretly selling the idea to other individuals and companies. If the idea has not been patented by the owners, it may immediately be patented by the immediate buyers who may, later on, sue them.
The other risk that may be faced by the company is that the contractors may delay in completing the project on time and hence exposing it to the risks of duplication. This is so because the contractors are free to do the task they are given at their own pace as employees have no control over them. As a result, other competitors companies may manufacture low-quality products similar to the company that invented these products and sell them at lower prices. This results in competition about the prices of these products. Consequently, a company may fail to meet its target. Some of these products that may be manufactured by these companies include hard disks drives, disk arrays among others.
The contractors may also not take the necessary safety precautions in developing it which may make the information leak to other external parties. This may render the uniqueness and value of the idea useless to the company. This happens because the companies have no total control of their contractors as could have been the case if they had permanent employees. In Addition, the company may be sued by some disaffected, unemployed, and injured contractors in case they feel that employees misclassified them as contractors instead of employees. This is so in a case where employees tried to have some control over the contractors. There is also a risk of being at loggerheads with federal agencies especially the Internal Revenue Authority (IRS) due to classifying employees as contractors as these agencies want companies to have many employees as the higher the number of employees the higher the taxes.
Type of contracts that would be suitable for production through the use of independent contractors
Several commercial contracts may apply to this kind of technological idea. Some of these contracts include Definite Quantity Contracts, Time and Materials Contracts, Firm Fixed-Price Contracts, Commercial Real Estate Contracts, and Fixed-Price Contracts. These contracts are usually applicable to different types of business entities depending on the purpose that the contractors desire to fulfill. There are contracts whose costs may be estimated yet there are those whose cost may only be determined as the work progresses (Gillies and Moens 85). For contracts that involve technological developments, it may not be easy to determine their immediate costs until the project has been completed. This is mainly because it is difficult to ascertain the logistics that will be involved in developing them which may be determined after considering the time that is taken.
In this case, the time and materials contracts will be the most appropriate for the application. Time contracts are very important as contractors will ensure that they complete the task in due time and this will avoid duplication of the products produced by a certain company and ensure that the technical know-how of the company is not used by other competitive companies. On the other hand, material contracts are very applicable here as this will ensure that the contractors use the materials that were agreed upon this will not lower the quality of products.
Licensing regulations
These regulations provide the information needed and the process involved in any firm that is using independent contractors. There are many types of licenses such as personal licenses, premises licenses, and club premises, and temporary events notices among others (Bixby 45).
Conclusion
Information Technology as one of the company may decide to use contractors and hire fewer employees. This will make the company have some benefits though there are also some risks associated with this. There are also different types of contracts that can be used in production when using independent contractors.
Works Cited
Bixby, Michael, Mayer, Don, and Ray, August. International Business Law: Text cases, Reading. New York: Prentice-Hall, 2008. Print.
Gillies, Peter and Moens, Gabriel. International trade and business law policy and ethics. London: Cavendish, 2000. Print.