3 Reasons for Freelancers in Your Company

Freelancers & Full-Time Employees!

Many companies, especially agencies, increasingly rely on freelancers alongside full-time employees. Some out of necessity, others prefer a diverse mix, and still others run a lean core of permanent staff with a larger cohort of freelancers. Freelancing has opened a new path for professionals worldwide seeking financial independence. Across all industries, there are more and more freelance positions, and an increasing number of companies are adapting to the trend by hiring a mix of freelancers and full-time employees. According to Forbes, nearly 90% of large companies believe that freelancers are essential to their workforce.

In this article, we look at the different models and discuss their pros and cons.

What Are the Differences: Full-Time Employees & Freelancers

Full-time employees must sign an employment contract with defined terms typical of permanent employment. As a result, full-time employees have longer tenure and greater job security than freelancers. There are notice periods and professional development opportunities. Full-time employees generally also use company resources, and the company pays taxes and social contributions on their behalf.

Freelancers, on the other hand, usually work on a project basis. They become active when specifically commissioned by a company and are paid on an hourly, daily, or project basis. There are no notice periods for freelancers; they work with their own resources and are responsible for paying their own taxes. There are also no retirement benefits from the client.

Advantages of Full-Time Employees

Loyalty & Retention: Full-time employees tend to be more loyal to their company. They have a sense of job stability and receive numerous benefits from their employers, such as health insurance, retirement plans, etc. Furthermore, when employees see that their employer invests in their development, they perform better.

Knowledge: Full-time employees know the "ins and outs" of the company better. Knowledge is passed on more sustainably and "lives on" in long-term employees.

Legal Certainty: There are hardly any legal gray areas. The risk of false self-employment is reduced. At the same time, compliance risks are significantly minimized through permanent employment.

Advantages of Freelancers

Flexible: Average weekly working hours, fixed working hours and locations, and fixed routines often no longer match people's wishes and life circumstances.

Low Training Requirements: Employers must regularly invest in the training and development of their employees to stay competitive. Onboarding, orientation, and employee training are mandatory costs that companies must incur at regular intervals. This is not required for part-time workers or freelancers.

Lower Costs: When employees work remotely, the costs of office space and maintaining staff are significantly reduced. Additionally, employers do not have to offer additional benefits and perks (such as retirement plans, health insurance, social security, etc.). So even if the freelancer is expensive, the overall costs drop significantly.

Lower Risk: Most companies commission freelancers on a project basis. This makes costs and budgets easy to plan.

Simpler Hiring Process: Online freelancer platforms make hiring freelancers easy. With a limited budget, you can book IT professionals, marketing experts, designers, or copywriters. The approach is fast and saves money compared to a traditional hiring process. Since there are no geographical restrictions, you can also hire qualified freelancers worldwide.

Best Industry Talent: Today, many freelancers are highly qualified specialists with years of industry experience. So if you choose wisely, you can attract top talent.

Connections: Experienced freelancers typically have an extensive network of meaningful contacts. For example, if you commission a designer, they can recommend an experienced copywriter for your project.

Personnel Costs

Personnel costs play an essential role in the creative industry. Whether websites are programmed or conceived, logos designed or animated, or texts written — employees or freelancers are always involved. Personnel costs arise mainly from salaries paid to employees or from transactions with freelancers. But let's take a closer look:

Costs for Employees

• Salaries
• Social contributions and taxes
• Office costs, internet & mobile
• Laptop & technology
• Professional development
• Recruiting

Costs for Freelancers

• Hourly, daily, or project rates

3 Reasons for Freelancers in Your Company (Conclusion)

Every company is different. That is why the question of which model is better cannot be answered universally. Employee retention and the associated motivation and productivity are certainly central questions. Costs and the associated risk for the company are also essential points for strategic consideration. Companies that depend heavily on project business, such as agencies or architects, struggle with high volatility in incoming payments: projects are postponed, milestone payments are delayed, approvals drag on. However, salaries for full-time employees, along with all other fixed costs, are paid monthly. These risks can be effectively addressed by commissioning freelancers. Project budgets and costs can be better aligned.

The Mix Makes the Difference

One can certainly say that a mixed model offers quite a few advantages:

Knowledge stays in the company through employees and is sustainably maintained

Costs and project risks can be diversified through the use of additional freelancers

A wide selection of people who could potentially work for the company, whether due to broader working conditions or a larger pool of potential applicants (permanent staff and freelancers)

Productivity & Growth

To make better decisions, it is also helpful to look at your own numbers:

• How is the ratio between full-time employees and freelancers developing? What impact have these developments had on revenue or profitability?
• How are personnel costs developing, also compared to revenue?
• How is productivity developing (costs / revenue)?
• What is the growth compared to previous year or previous month periods?

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