PMCs are also known as security contractors, although this term usually refers to individuals employed or contracted by PMCs. Services are mainly rendered for other business corporations, international and non-governmental organizations, and state forces.

Private military companies are sometimes grouped into the general category of defense contractors. However, most defense contractors supply specialized hardware and perhaps also personnel to support and service that hardware, whereas PMCs supply personnel with specialized operational and tactical skills, which often include combat experience.

The 1949 Third Geneva Convention (GCIII) does not recognize the difference between defense contractors and PMCs; it defines a category called supply contractors. If the supply contractor has been issued with a valid identity card from the armed forces which they accompany, they are entitled to be treated as prisoners of war upon capture (GCIII Article 4.1.4). If, however, the contractor engages in combat, he/she can be classified as a mercenary by the captors under the 1997 Protocol I Additional to the Geneva Conventions (Protocol I) Article 47.c, unless falling under an exemption to this clause in Article 47. If captured contractors are found to be mercenaries, they are a unlawful combatants and lose the right to prisoner of war status.

Article 47.-Mercenaries

1. A mercenary shall not have the right to be a combatant or a prisoner of war.

2. A mercenary is any person who:

( a ) Is specially recruited locally or abroad in order to fight in an armed conflict;

( b ) Does, in fact, take a direct part in the hostilities;

( c ) Is motivated to take part in the hostilities essentially by the desire for private gain and, in fact, is promised, by or on behalf of a Party to the conflict, material compensation substantially in excess of that promised or paid to combatants of similar ranks and functions in the armed forces of that Party;

( d ) Is neither a national of a Party to the conflict nor a resident of territory controlled by a Party to the conflict;

( e ) Is not a member of the armed forces of a Party to the conflict; and

( f ) Has not been sent by a State which is not a Party to the conflict on official duty as a member of its armed forces.