When Is Hiring Freelancers a Good Idea?

With so many people freelancing due to various reasons, it's inevitable to look on the other side and explore when and why the companies opt to hire freelancers.
When Is Hiring Freelancers a Good Idea?
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Guest Writer
CEO of Transformify; Professor at Zigurat Business School
6 min read
Opinions expressed by Entrepreneur contributors are their own.

The gig economy is here to stay and it’s a no surprise that more and more people consider freelancing as an additional source of income or as a small business of their own. According to some stats, it is projected that in the U.S. alone, in 2027, there will be 86.5 million freelancers comprising 50.9 percent of the total workforce. The situation in India and other parts of the world is similar, although in some EU countries people still prefer full-time jobs.

With so many people freelancing due to various reasons from repaying student loans to saving for a new home to making the ends meet, it’s inevitable to look on the other side and explore when and why the companies opt to hire freelancers.

Some time ago, Transformify HR Software &Freelance Platform launched the ‘’Gig Economy’’ series asking HR Managers, senior executives and startup founders when and why do they hire freelancers, are gig workers more or less loyal than the full-time employees and if team productivity suffers when freelancers are involved in the process.

So, when is hiring freelancers a sound business decision?
 

Unsteady workload

Usually, when the company is growing, there are periods when there is lots of work and when there is close to none. It is typical for businesses working on a project basis such as marketing and PR agencies or software outsourcing companies. Hiring freelancers and relying on a pool of freelancers they work with over and over again allows these companies to cut costs and to increase profit margins.

Casey Hill, HR Manager at Bonjoro, said:

At Bonjoro, we operate a global workforce, spread out across three continents (Europe, North America, Australia). We hire freelancers because we find that it gives us versatility and high-quality workforce at a good price point as a fast-growing startup. Often, with full-time employees, there is a longer learning curve and you are cultivating or developing them in your niche/industry over time. With freelancers, we feel that we are able to get high value quickly and can use them in a flexible capacity (i.e. more hours when we need that time most and fewer hours over slower periods).

Source: Transformify HR Blog

Bootstrapping

Some companies choose to raise no funding early own to avoid dilution or to have a more flexible and fast decision-making process in place. However, having no external source of funding requires robust cost control and full utilization. Hiring people who are underutilized as the company is still not growing fast enough or trying to wear many hats not having the right skills, is a recipe for disaster. The best option is to hire freelancers for all those tasks that are one time or irregular.

When we founded Transformify HR Software & Freelance Platform, it was clear that bootstrapping was the best way to go. We had a certain budget and had to release our product within that budget as there was no other source of funding. Relying on freelancers was the best possible decision as hiring a project manager, graphic designer and QA on full-time basis but utilizing only thirty percent of their time was not feasible at all.

If the company is self-funded, it is rarely possible to hire full-time employees and fill in all the roles. Hiring freelancers allows to have all the skills, and at the same time, to achieve full utilization.

Rare Skill Sets

Imagine that your company is implementing an ERP system and you need someone who has experience within the same industry with a very similar project. It is expected that the project will be completed in six months so the person you hire will not be needed thereafter. What options do you have? To hire a full – time employee and to try to find a different role for them once the project is over? Or maybe to outsource the project to a consulting company?

Often, the best one could do, is to hire a highly skilled freelancer on a project basis.

Kasper Dam, CEO and Co-Founder of Kandio, said:

‘’In my early days as an entrepreneur, most of my businesses were established in Denmark. Then, I had a startup idea that I wanted to build and had played with the idea of moving to Southeast Asia simply because of the talent that they have and that it’s becoming the next melting pot for startups. Freelancing is an emerging trend in this side of the world and it’s a no-brainer for entrepreneurs like me. You get quality work at an affordable rate and on top of that, the talent pool is endless.’

Source: Transformify HR Blog

No Training Needed

When minimal or no training is required, it is easy to onboard freelancers and to rely on a pool of people who can add creativity and see the same problem from a different point of view. This is especially valid for skilled designers, copywriters or digital marketing experts. Data entry jobs are another good example.

Diversity of Thought

Hiring people who have different backgrounds, skills sets and life experiences adds value to the team. It appears that those freelancers having more than one client are bringing a fresh look and may resolve a problem faster as they have already faced a similar challenge before when working for another client.

Asked if freelancers having more than one client bring in fresh ideas and innovation, Josh Ladik, President of GSA Focus, said:

‘’Somewhat, yes. If they have worked with a variety of businesses, then they have likely learned "tricks" from every gig. Over the course of several years, their capabilities and speed improve. They become a “Jack of all Trades.” I have had a freelancer hand back a completed task with head-spinning speed because they knew how to use excel to automate the data entry.’’ Source: Transformify HR Blog

Hiring a freelancer who is familiar with the culture and traditions of the market the company has just entered is invaluable. Even more, this can save lots of costs when the market is yet to be validated and it makes no sense to incorporate a legal entity in a foreign country just to hire a handful of marketing and business development employees who may need to be made redundant in less than a year. Entering new markets can be times more efficient and cheaper if the initial team comprises of freelancers who speak the local language and have a vast network.

Of course, there are cases when hiring freelancers is not the way to go. These include complex processes, time-consuming training and onboarding, and in some cases, risks associated with data privacy and intellectual property rights violation.

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