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Why Freelancers Are a Better Option Than In-House Employee

Updated on February 14, 2019
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Vulpith is a cloud platform; for e-sourcing/freelancing of Professional Services that can be delivered online.

Advantages of Working with Freelancers

Freelancing is becoming the way of life for millennials with the growth of the gig economy, which has been growing at a steady rate of 2.6% per annum.

Nearly 50% of the millennials in the United States love to work independently and prefer freelancing over a full-time corporate job according to a recent Forbes report. If this trend grows, the US economy will be mostly represented by freelancers in the future.


1. Cost

Most companies feel that hiring expert freelancers is expensive as compared to hiring a full-time employee.

Let us analyze if this is the case in reality. Please note that we are talking about hiring resources for non-core or support activities only where freelancers can be considered for hiring.

a) When you hire a full-time employee for non-core or support activities, you need to pay the following:

Direct costs: Salary, Infra & Maintenance, Paid Leaves, Insurance, EPF, Medical Insurance, Travel, Hiring & Training, Retention Costs and more

Indirect costs: Motivational / Employee Engagement activities, Support teams/Admin Support, IT teams and more

b) When you hire a freelancer for non-core or support activities, you need to pay for the direct costs only.

Direct costs: Fixed or hourly costs, Training costs (if any)

Now, let’s calculate the yearly cost for 5 years experienced resource, one who is a full-time employee and other, a freelancer:

Cost of hiring an employee: INR 10 lacs per annum (Salary) + INR 2 lacs (Direct Costs) + INR 2 lacs (Indirect Costs) = INR 14 lacs per annum (or) INR 1.15 lac per month (or) INR 700 per hour

Cost of hiring a freelancer: Let’s say that you hired a freelancer for 500 hours in a year at the rate of INR 1000 per hour. This comes to just INR 5 lac per annum.

As you can see, this is a whopping 60% to 70% costs saving when you hire freelancers over a full-time employee for non-core or support activities. With freelancers, one major advantage is that you pay only for the completed task.

2. Expertise

With freelancers, you have easy access to a wide range of talent from all over the world. Each freelancer might have worked with different clients; hence you will enjoy working with the best minds available in the industry.

For example, you need somebody to deliver your AI or machine learning projects within a tight stipulated deadline. With the power of the Internet, you can start working with the best freelance AI specialist located in any corner of the world and you can deliver a high-quality project to your client.

In addition to being cost-efficient, specialty niche freelancers can complement your in-house efforts by bringing industry-leading experience and skill sets to the organization. Hence, freelancers help to increase your business expertise and specialization.

3. Efficiency

Working with freelancers increases your business’ productivity with quicker turnaround time on projects. Since, freelancers are passionate, self-employed and run their own business, they are more efficient than in-house employees. In fact, multiple studies have validated that freelancers are extremely motivated in comparison to the in-house team.

Freelancers are less stressed and highly productive according to a study done by PGI on telecommuting. This enables an organization to deliver a project much faster and improve overall business efficiency and productivity.

Advantages Of Working With the In-house Team

1. Direct Supervision

You will be able to monitor and supervise full-time employees directly. Direct monitoring and supervision are the prime advantages offered by an in-house team.

If a complex project demands high confidentiality or more iterations, opting to full-time in-house talent is the best.

This, however, does not mean that you cannot monitor the freelancers; of course, you can monitor them remotely and instruct them to deliver a project within a stipulated timeline by incorporating periodic checks and interventions. This will be discussed in detail in our next article.

2. Commitment

The in-house team and employees are more attached to the vision and goals of the company. They tend to be more loyal and play a greater role in the success of the business. This is a major advantage that in-house employees have over freelancers.

However, there are ways you can build loyalty and commitment to your team of freelancers as well. This will be discussed in detail in our next article.

3. Accessibility

With in-house employees, you will be able to maintain work continuity without any break increasing business efficiency and effectiveness.

As the manager, employees are more accessible to you than freelancers. Whenever you want to know the status of a project, you can quickly call for a meeting or discussion with your in-house team.

In our upcoming articles, we will be discussing how to solve the accessibility issue with freelancers.

Conclusion:

Today, freelancing is becoming the way of business across the globe. The sustained growth of freelancing market proves that businesses are increasingly looking for freelancers for specialty skills, on-time, and high-quality works.

With the evolution of the remote work management software, managing the deliverables of freelancers are becoming simpler and easier today. With the power of freelancing efforts, you can deliver projects 24/7 to delight your clients and customers.

One can surely rely on freelancers as they are passionate, always learn and grow, take up challenging projects and delivers at an affordable budget.

Our final thoughts are that complementing your in-house talent with the expertise and fresh perspective of freelancers is the best way forward for your business.

*Please note that as a general rule of the thumb, it is wise to deliver the core competencies in-house rather than freelancing and you can distribute the non-core activities to the specialized freelancers.

We hope that you found this article useful. We would love to read your comments and know your thoughts. If you liked this blog, please share with your friends. Please do follow this page to know when our next blog is posted. Thank you!

Stay tuned for our next blog in this exciting series: “If You Can Train The In-House Team, Why Not Freelancers?


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