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Why Companies Are Choosing Freelancers Over Full-Time Employees

business.com editorial staff
business.com editorial staff

On-demand workers are an increasingly popular option for corporations.

  • Freelancer is another name for on-demand workers.
  • Specialized skills and expertise, as well as cost-effectiveness, are among the top benefits of hiring freelancers.
  • More and more workers are abandoning traditional jobs in favor of the flexibility of freelancing.

Companies are increasingly hiring freelancers to meet work demands rather than full-time employees. What makes this growing segment of the workforce so appealing to corporations?

It's the time of the freelancer. Even with the challenges facing freelancers (like the unpredictability of income and lack of benefits), more and more workers are either wholly abandoning their traditional jobs in favor of a more flexible schedule or keeping the security of a permanent position while freelancing on the side. With the numbers growing steadily, it makes sense that freelancers would eventually attract the interest of corporations.

The status quo for years was for companies to hire permanent employees. However, recently, corporations are more frequently outsourcing project-based jobs to freelancers, rather than hiring full-time staff.

Whether you are a freelancer yourself or a business owner considering hiring a freelancer rather than a long-term employee, the outlook is bright as this arrangement increases. These are the main reasons why companies love to hire freelancers.

Pros of hiring freelancers

Specialized skills and expertise

There's always been a stigma attached to freelancers, with many believing that they aren't as skilled as their full-time counterparts. This is not true, especially as of late. Because freelancing offers freedom and flexibility that's impossible with traditional 9-to-5 jobs, many workers are turning to it as either their sole source of income or additional income. Therefore, the talent pool is rapidly increasing, meaning that people from various fields are using their significant knowledge and expertise in freelancing gigs.  

Think about how this could be useful for a company. Say you need a professional writer for a single project. It would not make sense to hire a full-time writer, because your writing needs aren't enough to justify it. Hiring a full-time employee would be expensive and a waste of company money. However, a freelancer would fit the project perfectly. The company would use the freelancer's skills for the project, pay them and then the two entities would part ways.

Cost-effectiveness

When companies hire full-time employees, they are responsible for providing benefits. These usually include health insurance, paid time off and sick leave, which are all expenses that the company has to pay. Freelancers are free agents, not part of any company's permanent staff, so the employer does not need to provide freelance workers with any benefits. This is a perk for employers but a disadvantage for freelancers, who lose money whenever they take a vacation or get sick.

When freelancers are hired for projects, companies can spend less because they only have to pay the freelancer for their services. This could be one of the fundamental reasons motivating corporations to utilize freelancers more frequently.

3. Project-based work

Not all projects and tasks require a full-time employee. Many projects are one-off assignments that have various start and end times throughout the year. These projects may require completely different skill sets, so hiring one person full time to complete them just doesn't make sense. A full-time employee may have the specific skills needed for one project but lack the expertise to complete another effectively. 

This is where freelancers shine. Freelancers are expanding their skill sets to keep up with the evolution of the workforce. However, more pertinent to employers is the specificity of the skills most freelancers have. You may have a project that requires a graphic designer but not enough to justify hiring one full time. The logical solution? Hire a freelancer. Then, when the next short-term project rolls around, such as one where you need the skills of an app developer, you can hire another freelancer with those skills. This makes more sense than hiring full-time staff for short-term assignments.

Cons of hiring freelancers

There are more and more companies that are deciding to hire freelancers instead of part-time or full-time in-house employees. This decision is beneficial financially and from the business standpoint; why pay employees hourly that aren’t consistent in their productivity when a business can simply pay for the work as it’s completed? Although many benefits come with hiring freelancers, unfortunately, there are cons as well. Some of the cons of hiring freelancers may include:

No formal structure

Freelancers can work from home or anywhere else that provides internet connections, which means that they are not attached to a formal structure. This sometimes leans to no contract between the business and the freelancer; leaving businesses without a guarantee that their project will be completed. In other words, freelancers can and sometimes do, simply disappear in the middle of an assignment. You don’t always know what will happen, including the possibility of missed deadlines, low quality work and just disappearing. Although the freelancer can be replaced, it may be a complete mess scrambling to someone else to do the work.

No quality assurance

Regardless of how much effort you put into finding the ideal freelancer, sometimes they just don’t meet expectations. Not only is there a risk of them quitting halfway through, but there is a risk of them sticking it out, only to submit low par work. It’s important to weigh the odds when hiring a new freelancer. For instance, be sure to verify their references and consider hiring them on a trial basis before assigning highly detailed work.

Working on multiple projects

One of the downfalls of working as a freelancer means unstable income; they often cannot depend on only one business or individual as a source of stable income. What this means for businesses hiring a freelancer is that they may take on multiple projects at the same time, which may slow down the progress of completing your assignments. In fact, they may be working on your project, receive another project elsewhere and push your assignment to the bottom of the priority list.

Takes time to find the right freelancer

Although the task of hiring a freelancer may be a fairly quick process, it may take time to find the ideal freelancer for the specific task at hand or if you need something done immediately. For instance, if your business offers services with a 24-hour turnaround, you may be cutting close trying to find a freelancer that can meet these requirements. If you offer quick turnaround services and intend to use freelancers, it’s best to find one or two that you can reach quickly and depend on for quick services.

Freelancers may find jobs easier to obtain in the future. There has been a shift in mindset toward freelancers. While the myth that freelancers aren't as skilled as full-time employees may remain, many corporations are starting to see the benefits of using freelancers instead. Financially, freelancers ease the burden by not being entitled to benefits. They also have specific skills perfect for short-term projects.

 It is important to keep in mind that hiring freelancers are a double-edged sword; there are both advantages and disadvantages that come with hiring a freelancer. Sometimes it’s the perfect choice, but sometimes you may end up with more problems than you started with. Always consider the good and bad when hiring freelancers and when you find someone that provides quality work and is dependable, hire them as often as possible.

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