Difference between Vendor and Contractor

There are many different people/organizations involved in the success of a working firm. These organizations or individuals supply a company with a comprehensive range of resources, including financial assistance, the provision of goods and services, the recruitment and employment of personnel- even advisory services.

Vendors and contractors are two common examples of such assistance oriented parties. They may be organized as companies, single proprietorships, or even partnerships, and their goal is to develop supply chains that are efficient and affordable. Vendors and contractors are sometimes mistaken for one another; nevertheless, there are a number of key distinctions between the two.

Who are Vendors?

These are individuals or companies who sell items to end users or to other companies for use in their own operations. Vendors are basically suppliers of products or services to multiple clients. However, the services or products they offer undergo intense scrutiny at the hands of their clients. In fact, clients often conduct comparative research on a number of aspects, including price, appropriateness, guarantee, and even performance, across a number of different vendors before making a purchase.

This comparative analysis at the hands of clients creates a highly competitive market in which these vendors and suppliers must compete. Majority of business people working today choose to employ vendors to help process multiple assignments simultaneously, instead of having to wait for in-house resources to finish assigned tasks before they can pick up new workload.

Having said that, there’s a checkered history between vendors and clients with many such suppliers, either willfully or succumbing to market pressure, folding their business abruptly and leaving their clients hanging mid project. Over the years, regulatory bodies and legal institutions have worked hard to mitigate the risks associated with the unreliability of their suppliers by implementing tough laws and watch dog policies.

Who are Contractors?

These members of an organization are tasked with carrying out particular responsibilities by a predetermined deadline. They often have a short duration and are based on contracts, and they may require frequent renewal. To give just a few examples of the types of businesses that fall into this category: consultants, defense contractors, general contractors, independent contractors, and school bus contractors.

Differences − Vendor and Contractor

Both offer crucial services to customers, be they corporations or people. The following table highlights how a Vendor is different from a Contractor −

Characteristics Vendor Contractor


A person or company who sells things, most of the time products that are comparable to one another, to a variety of clients is known as a vendor.

A person who is hired by an organization to carry out particular responsibilities that have a predetermined deadline is known as a contractor.


Both large and small enterprises are customers of the vendors that provide goods and services.

Customers, which might include institutions as well as private persons involved in projects, can get services from contractors.


When evaluating a vendor's performance, elements such as quality and on-time delivery are important considerations.

After work has been completed, a determination is made regarding the performance of the contractors, which may have legal repercussions such as penalties in the event that the requirements are not met.

Long/ short term

Long-term services are often provided by vendors.

Since the employment of contractors is often temporary in nature, the agreements governing their engagement may need to be renewed at regular intervals.


Although a person has the option of working with either a vendor or a contractor, it is important to keep in mind that both of these roles play an important part not only in the commercial sector but also in the lives of individuals. In general, a vendor is someone who sells goods and services to end users, whereas a contractor is someone who is given certain jobs to undertake in their field of business.

Updated on: 16-Dec-2022

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