[sfifs]

Yes very likely they're trying to mitigate against what is sometimes known as "co-employment risk".

Basically different types of companies have different legal requirements in terms of taxation, retirals and benefits. In the legal system of two countries I am familiar with larger companies have a higher burden than smaller firms.

In this scenario, a large company could theoretically reduce their costs by contracting a number of their workers as employees of smaller firms and masquerading as if they didn't have lots of employees. However it's still the management of the larger company which is supervising the work and therefore effectively committing fraud.

In situations I have worked with, there are a bunch of restrictions in what can be contracted out like this and what can't... Also how long can you have the contracted person working for the company - because if the work is person dependent, you should have hired the person directly.