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With increasing human resource expenses, companies are always looking for ways to cut their overhead costs. It may help to work with freelancers or contract workers to diversify your workforce and reduce costs.
Whatever the case, contract workers and freelancers can help a business operate more efficiently. Aside from cutting your overhead costs, it’s easier to connect with different experts for any project. However, there are several things to consider when deciding to work with a freelancer or contract worker.
Freelancer vs. Contractor
While freelancers and contractors might seem similar, they’re actually different. The key difference is the contract. Freelancers typically sign non-disclosure agreements (NDAs) while contractors sign contracts.
In the case of a freelancer, they can work for any client, taking as many projects as their time allows. They can set their own rates or accept a mutually agreed upon rate and work from anywhere they want. Freelancers are not bound to any single client.
On the other hand, contractors are more like “temporary employees.” They are typically bound to a client as stipulated in the signed agreement, meaning they work for one particular client at a time. The contract ends when either of the parties wants to opt-out. Contractors can work onsite in the client’s office or from their own workspace.
Both freelancers and contractors are not traditional employees, meaning they can’t receive the typical employee benefits. This can save you money in the long-run. They are self-employed and are responsible for their own benefits. However, it’s vital to understand the laws of different states, such as California, with new employment laws.
Hiring a Freelancer or Contractor
Working with freelancers or contract workers comes with both negatives and positives. It’s vital to weigh them before making a choice.
Pros
- Save Money– Hiring contractors and freelancers is often more cost-efficient compared to hiring full-time employees. You are likely to avoid costs, such as office equipment, medical cover, training, and taxes.
- Hire a Geographically Diverse Team– Since most freelancers and contractors can work remotely, it’s possible to set up a more diverse team. This gives you team members with different backgrounds, experiences, and skill profiles.
- They Are Often Specialists in Their Field– Most freelancers and contractors are usually specialists in their fields with vast experience from working with different clients. It is easy to find a professional for just about any project.
Cons
- Training– You might need to train your team to ensure they understand the specifics of your project. The geographical gap can make training a challenge, but you can use online platforms to provide training.
- Higher Turnover– Since freelancers are not bound to you, they can quit at any time without notice. You’ll need to hire new members often, which can affect your team’s productivity, leading to delays.
- Less Attachment to Your Company– Freelancers and contractors pick projects based on rates and career growth. This means they have less attachment to your company, and they can easily quit when a more suitable project comes along.
Contractor Insurance
Working with freelancers is quite different from working with contractors. You’ll need to treat contract workers similarly to how you treat full-time employees. However, this relationship comes with unique risks that can affect your business.
It is vital to ensure your business is protected in the event of any incident, claim, or issue. For example, business owners should look into general contractor insurance to protect themselves and their business.
Does Your Company Have the Need?
Most companies set up in-house ad-hoc teams for small projects, pulling away resources from other projects. This can limit productivity and deliveries for other projects. Instead, it’s beneficial to work with freelancers or contract workers to complete small projects.
It’s easy to set up an effective workflow with remote tools and manage remote teams to ensure successful projects. There are also online platforms that make it easy to connect with freelancers and contractors for your projects. Examples include Upwork, Fiverr, Thumbtack, Task Rabbit, and Field Agent.
Making the Right Hiring Decision for Your Business Needs
The gig economy is growing as more and more employers target cost savings. Working with freelancers and contractors became even more popular during the 2020 health crisis. Still, you need to ensure you put in place the necessary workflows and secure insurance to ensure successful project completion.
