Is it professional to cut out a middle-man in a contract chain?

Question

I currently work via 2 contracting companies: CompanyA and CompanyB. So the hierarchy is like this:

I'm contracted to CompanyA which is contracted to CompanyB which has a contract with the final customer.

Now a contract renewal must take place and I was thinking of going directly through CompanyB because that way I'd get a salary raise, as the costs of CompanyA are cut to zero.

Do you think it is professional to do this?

This is my first contract as a freelancer and I don't know what to do because I feel I might be better with just 1 contracting company.

UPDATE-1: the thing is that actually at some point I was asked if I want to change the contract directly to CompanyB. But that was a previous contract extension, now I'm thinking if it is fair to ask since I initially said I wanted to go through CompanyA.

Answer 1

Generally when 2 companies enter into a sub contracting relationship they also agree not to recruit from each other. Usually there is significant remuneration required in order to do so. This makes it unlikely that the prime contractor will be willing to seriously consider hiring you away from their subcontractor.

In addition most companies in a contractor arrangement, require that you sign a non-compete in order accept the position. This document will generally prohibit you from entering into a business relationship with any business partners which would compete with your current employer. Being hired by their prime contractor fits this. Some states allow it to be prohibited, while others simply allow for damages. In this case the damages are generally the full amount they were paid to fill your position.

If there is a reason you would need to move to be an employee of the prime contractor you should first talk with your current employer. Some positions may not be covered by the sub contracting agreement and you may be eligible to move to the prime company.

If you are considering the move because you think it will mean more money for the same job, this is unlikely, at least in a significant variation. Most prime contractors make management fee for handling sub contractors. But should you become an employee of the prime you will still likely make the prevailing wage for that position. It is possible that you would even take a cut in pay.

Answer 2

This answer is based purely on your update, in which you said

at some point I was asked if I want to change the contract directly to CompanyB. But that was a previous contract extension, now I'm thinking if it is fair to ask since I initially said I wanted to go through CompanyA.

Given there is precedent, it would not be unprofessional to politely inquire at contract extension time if the offer to switch to Company B is on the table again.

All of the general information in Chad's answer is absolutely true and should be considered; however, in the specific situation where a precedent has already been set, it's not unreasonable to politely inquire about possibilities.

Answer 3

Do you think it is professional to do this?

NO!

But i think the advise doesn't stop there.

The point is, Company A is in business for some reason - and for a reason probably better than you because they hired you.

The reason can be that including but not limiting to:

• they are in here for longer times,
• better relationship with other customers,
• better marketting/sales network than you have alone,
• better project management and client interaction framework (may or may not)
• better terms with CompanyB than you might think initially
• and perhaps more financial stability which means if contract with end customer goes awary, company A still have some obligation to you if you were not culprit. (never undermine this)

So you are killing your relationship with CompanyA almost immediately while there is only a small hope to remain connected to CompanyB (which might still take more than couple of project at least.

Also, you are turning companyA as your competitor.

So it is not truly unprofessional, it does imply betrayal - specially if you are yourself a one project company.

In general, you can take a step like this, over time, but only when you are largely recognized as an independent name by yourself and if and only if companyB make an offer if they think that companyA is not adding value in the chain!