Outsourcing can be quite legit. Sometimes a client want to give the entire project to someone else to handle the hiring and quality assurance. But the usual assumption is that the client knows the freelancer is outsourcing.

It's also perhaps common for freelancers/independent contractors to outsource projects (or a nasty part of the project) they don't want to do or they are too busy to do them. There are stories like that, but they don't specify if they have informed their clients.

On the other hand, some clients never expect their hires to outsource to others. They want the work to be done by the person they hired. Some might refuse to pay the freelancer when they find out that the work is being subcontracted.

Is there a line between outsourcing being legit versus shady? Are freelancers/independent contractors legally required to inform their clients that they are outsourcing?

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This depends totally on the type of contract with the client. If you are in a "full time employee replacement" contract, you are expected to be the person doing the work. In that situation, you are supposed to be available 40 hours per week for that client's demands. Thus, when someone in that type of contract sends work out on subcontract, the client may terminate the contract.

Also, certain contracts require that the person doing the work be a US citizen and that the work is physically done within US territories. Subcontracting can break that requirement.

On the other hand, if you are doing a project, then any subcontracting is between you and the subcontractor. When I send work out on subcontract, I stand behind the work of the subcontractor, inspect what is done, and will replace the subcontractor if the work is not up to my standards. From the client's perspective, the issue is whether or not the work is done to standard, but it can help the relationship to tell the client about the team working on the project.

When subcontracting work out, the question is the type of relationship with the client. You may need to reassure the client that you have signed NDA's with your subcontractors. You may need to reassure the client about your quality controls. You may need to reassure that the work is being done on US territory.

Finally, your cost control over the subcontractors is important. I had to stop one project because the client had been asking the subcontractor for all sorts of changes and the project was about to run way over budget. That was a difficult discussion with the client as they thought that I was making gobs of money when I was about to lose money. I don't want the subcontracting to cost more than 50% of the budget as admin and sales and marketing will chew up most of the rest.

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