In 2016, a study showed that there were nearly 55 million people freelancing in the US, comprising nearly 35% of the country’s workforce. As the freelance economy continues to grow, employers are faced with the need to develop policies for outsourcing work to contractors and freelancers. While there are many benefits to this shift to a freelance economy, there are also many factors businesses need to consider before making the move.
Before taking the leap and outsourcing that upcoming project to a contractor instead of having someone in-house take care of it, consider the following:
It makes zero sense to outsource work to a contractor if you already have the talent in-house. Before you outsource any work, analyze your own team and their capabilities. Go deeper than general job descriptions and responsibilities.
I’ve found in previous roles that if you dig a bit, you can uncover some serious talent. I’ve discovered graphic designers working in copywriting roles, photographers toiling away at filing and other tedious tasks, and social media managers disguised as message board specialists. While the talents you’re seeking will depend largely on the industry or field (obviously the ones I mentioned fit into the scope of marketing), you can see where I’m going with this.
Allowing your in-house team to explore their true passions not only benefits the company by way of newly discovered talent, it also shows you appreciate your team and leads to increased job satisfaction. So, before you outsource, think about the benefits to you and your team if you decide to keep things in house.
Hiring contractors can save loads of cash by eliminating spending on overhead and avoiding committing to additional salaries. Contractors do the work you need and move on. Hourly rates may end up being higher than those that you’d pay someone in-house, but when you factor in the savings in other areas, it often makes a lot of sense.
So, if the talent you’re seeking doesn’t exist within your current team, it may make sense to bring someone in from outside to do the job. Why pay a high salary when you can bring in someone specialized to do the one thing they do best?
Nature of the project
Another consideration is the nature of the work. Will the project be ongoing or is it a one-off project? If it’s ongoing, and it requires 40-plus hours per week with no real set end date, then it might make the most sense to hire someone for an in-house position who can really get to know your inner workings, understand your brand and become a trusted part of the team.
On the other hand, if the project is very specific, short and sweet, it would be best to bring in a contractor and not place the burden on any of your full-time employees. Your in-house team already has plenty to do, and it doesn’t make sense to hire a salaried employee if you only have 15 hours of work for them.
Aside from the above considerations, the legal side of things often gets overlooked. Unless you love lawsuits, it’s important to stay abreast of the latest legal developments surrounding the freelance economy. Bringing in contractors isn’t as simple as creating a statement of work, signing off and then reaping the benefits. Your legal team needs to do its due diligence and understand the legal dilemmas that can arise when hiring contractors.
The first such dilemma is the fine line that determines whether someone is a contractor or if the arrangement constitutes employment. This distinction determines whether employers have to pay certain taxes and follow specific regulations. I’m not a legal professional (I don’t even play one on TV), so I won’t be offering any specific advice, but it’s important that you and your company’s legal representation sit down and discuss issues like this and others before crossing any lines and creating more serious concerns.
How to approach the conversation
Taking the above into account, it’s important to get the right people in the room to discuss whether contracting and jumping into the freelance economy is the right move for your company. It’s not right for everyone, but it can be extremely beneficial to a business if the situation is fitting.
Your HR team should be involved in the decision-making process, as well as your legal team and certain members of your senior staff. These types of decisions shouldn’t be taken lightly. The pros and cons of each approach should be discussed in detail, and once all the facts have been laid out on the table, then a strategic decision can be made.
After you’ve made the decision, it’s not just time to settle back and rest on your laurels. Any decision to hire contractors (or not) should be analyzed and assessed based on the value it added, or detracted, from your business. If you notice positive results based on your decision, then whatever decision you made was likely the right one. Look for things like cost savings, increased levels of productivity and employee satisfaction. If positive results are showing up in these areas, you’re on the right track.
Keep in mind, there’s no one-size-fits-all when making the contractor vs employee decision. I can’t make a recommendation for you one way or another. That’s up to you, the needs of your company, the opinions of your team and your overall situation. What I can tell you is that the freelance economy is here to stay, so follow these tips and be prepared to adapt based on the needs of your company.