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Updated Nov 06, 2023

Why Companies Are Choosing Freelancers Over Full-Time Employees

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

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Jennifer Dublino, Senior Writer & Expert on Business Operations
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Hiring permanent employees has been the status quo for businesses for years. However, today’s scaling companies frequently outsource project-based jobs to freelancers instead of hiring full-time staff. 

Hiring freelancers can be cost-effective and provide flexibility. However, this employment structure isn’t suited to every organization and situation. We’ll examine the pros and cons of hiring freelancers to help businesses determine if this solution is right for their circumstances. 

TipBottom line
When hiring freelancers, skills aren't the only consideration. Check references and portfolios, and ensure potential freelancers have excellent communication skills.

Why companies are hiring freelancers

Companies choose to work with freelancers for various reasons, including the following. 

1. Freelance talent is widely available.

Since COVID upended work as we knew it, more professionals have decided to freelance. Some take on additional work as a side hustle, while others freelance full time. Although challenges exist – such as income unpredictability and no set employee benefits – talented workers are readily available for project-based work. 

According to Statista, an estimated 60 million people worked as freelancers in 2022, and an estimated 86.5 million will be freelancing by 2027 – more than half the total U.S. workforce. With so many people opting to freelance, companies have a wide range of choices in nearly every area, including freelance web developers, digital marketers and IT workers.  

2. Freelancing brings businesses access to younger workers.

Younger workers are particularly suited to – and inclined to pursue – freelance work. According to Statista, 43 percent of Gen Zers and 46 percent of millennials report working as freelancers. 

Since such high percentages of younger workers choose the flexibility and independence of freelancing, companies looking to tap into these generations’ talents must at least consider hiring freelancers.

TipBottom line
If you'd like to start freelancing, create a portfolio of your work, investigate freelance websites and research how to set prices for your services.

3. Freelancers are often more productive.

Freelancers typically manage multiple clients. Because of their time-management skills, they tend to be more efficient and productive than their full-time counterparts. They earn money only when actively working on projects, motivating them to stay on top of their workload. 

Additionally, freelancers typically work from home, and remote work productivity is often better than in-office productivity because there are no co-worker distractions and time-wasting commutes. Additionally, freelancers aren’t usually required at productivity-killing meetings

Pros of hiring freelancers

There are benefits and risks when hiring freelancers. Here are some of the most significant upsides of hiring freelance talent. 

1. Freelancers bring specialized skills and expertise.

Freelancing offers freedom and flexibility that a traditional 9-to-5 workday can’t provide. Many freelancers are drawn to these benefits, deepening the freelancing talent pool as more people in various fields bring their significant knowledge and expertise to freelancing gigs.

Say your company needs a professional writer for a project. Hiring a full-time writer wouldn’t make sense; your writing needs don’t justify a full-time employee. It would be expensive and a waste of company money. However, a freelancer would fit the bill perfectly. The company could find a freelancer with the precise skills needed, and the two entities would amicably part ways after the project’s completion. 

Did You Know?Did you know
When hiring freelancers, ensure their job references are recent – within the last six months to a year.

2. Hiring freelancers is cost-effective.

When companies hire full-time employees, they must provide employee benefits, including health insurance, paid time off (PTO) and sick leave – expenses the company must pay. Freelancers are free agents – not part of any company’s permanent staff – so employers don’t have to provide them with benefits.

When freelancers are hired for projects, companies can spend less because they have to pay the freelancer for their services only. This is one of the most popular reasons organizations are turning to freelancers. 

TipBottom line
Negotiating with freelancers to arrive at a fair price is crucial. Paying them what they're worth sets the stage for a successful relationship and quality output.

3. Freelancers are ideal for project-based work.

Not all projects and tasks require full-time or part-time employees. Many projects are one-off assignments with various start and end times throughout the year. These projects may require completely different skill sets, so hiring one person to complete them doesn’t make sense. You may hire someone with a specific skill set for one project who won’t be able to help on the next one. 

Freelancers shine in project-based work. They’re constantly expanding their skill sets to keep up with industry trends. Even more importantly, they bring specific skill sets. You may need a graphic designer for one project and an app developer for another. Quality freelancing professionals can meet your needs as they evolve. 

4. Freelancers don’t need office space or equipment.

Most freelancers work from home, so companies don’t have to pay for additional office space needs for these workers or provide them with computers, desks, chairs and office supplies. These savings can add up significantly. 

Did You Know?Did you know
Businesses don't have to worry about workers' compensation insurance for offsite freelancers.

5. Freelancers give businesses hiring flexibility.

Freelancers give companies the flexibility to hire and downsize as needed. According to an A.Team survey, 71 percent of companies using freelancers say they enjoy greater agility in times of economic uncertainty. This agility makes it easy to quickly ramp up to meet demand or cut expenses as needed. 

Additionally, freelancers don’t usually need extensive training or onboarding and don’t require a severance package when they’re no longer needed.

Freelance workers can be hired quickly and are often able and willing to put in extensive hours, even nights and weekends, to complete a project by an agreed-upon deadline.

Cons of hiring freelancers

Although many benefits come with hiring freelancers, some downsides also exist, including the following: 

1. There’s no formal structure when working with freelancers.

Freelancers can work from home or anywhere with an internet connection. They’re not typically attached to a formal structure. This lack of formality may backfire when there’s no contract between a business and a freelancer. There’s no guarantee the freelancer will complete a project. 

In a worst-case scenario, a freelancer can disappear in the middle of an assignment. While you can replace a freelancer, an abandoned project brings untold headaches. 

TipBottom line
Like employment contracts, freelance contracts are advisable. Insist on a freelancer contract with specific milestones and guarantees with a corresponding payment schedule.

2. There’s no quality assurance with freelancing.

Other freelancing risks include missed deadlines and low-quality work. Regardless of how much effort you put into finding the ideal freelancer, they may not meet your expectations. Even if they see a project through, they may submit subpar work and miss crucial milestones. 

Vetting your freelancers is essential to avoid poor work output. Be sure to verify their references, and consider hiring them on a trial basis before assigning highly detailed work.

3. Freelancers may work on multiple projects.

Freelancers often can’t depend on one client business as a source of stable income. They often have multiple clients, which means numerous projects and potentially conflicting deadlines. 

You may hire a freelancer and have to deal with slow progress and a split focus. They may be unavailable when you need to discuss a project element – or they move your project to the bottom of their priority list.  

4. It can take time to find the right freelancer.

While hiring a freelancer can be a quick process, finding the right freelancer with the necessary skills for a specific project can take time. An intensive freelancer interview and vetting process may not suit a business with an urgent project that requires a fast turnaround. 

Did You Know?Did you know
Seek out freelancers willing to build a relationship with your business. You'll foster loyalty and connections that can strengthen your organization.

How to find and hire freelancers

Numerous resources and best practices can help you find freelancers ideal for your needs. Consider the following advice: 

  • Ask for freelancer referrals. Industry connections may have excellent freelancers they can recommend. Their referrals can save you time and hassle.
  • Browse Upwork for freelancers. Upwork is a major freelancing site with over 16 million freelancers. You can see examples of work, search for specific skills, view hourly costs and ask freelancers questions.
  • Access specialized freelancer sites. Specialized freelancing websites exist filled with qualified professionals with specific skills and talents. For example, find freelance content writers on Scripted or television producers on The Mandy Network.
  • Post for freelancers on job boards. In addition to listing full-time and part-time positions, most job boards let companies post jobs for freelance and contract work. Post your opportunity and let freelancers come to you.
FYIDid you know
Some of the best sites for freelance services include Fiverr, Behance, FlexJobs and Freelancer.com.

Hiring freelancers can help grow your business

In the past, freelancers were seen as inferior to full-time workers. However, this mindset has shifted, affording qualified professional freelancers the respect and opportunities they deserve. Businesses understand that freelancers can be a valuable addition to their teams, saving money and helping execute skills-based projects. 

While hiring freelancers has advantages and disadvantages, these no-strings-attached professionals can help grow your business and strengthen your reputation. Just be sure to find the right freelancers to include on your team. 

author image
Jennifer Dublino, Senior Writer & Expert on Business Operations
Jennifer Dublino is an experienced entrepreneur and astute marketing strategist. With over three decades of industry experience, she has been a guiding force for many businesses, offering invaluable expertise in market research, strategic planning, budget allocation, lead generation and beyond. Earlier in her career, Dublino established, nurtured and successfully sold her own marketing firm. Dublino, who has a bachelor's degree in business administration and an MBA in marketing and finance, also served as the chief operating officer of the Scent Marketing Institute, showcasing her ability to navigate diverse sectors within the marketing landscape. Over the years, Dublino has amassed a comprehensive understanding of business operations across a wide array of areas, ranging from credit card processing to compensation management. Her insights and expertise have earned her recognition, with her contributions quoted in reputable publications such as Reuters, Adweek, AdAge and others.
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