Running a company comes with its own set of celebratory moments and challenges. One of the biggest challenges is hiring the right team. After all, it is the teamwork that determines your success story. The next question that arises is whether to hire freelancers or full-time employees. They each come with their own sets of pros and cons that can make or break a deal. If you have been recently contemplating downsizing or upscaling your team, you must consider both sides of the coin before deciding.
While local talent, in the form of a full-time employee, can adjust quickly considering coming from the same culture and knowing about the area, you cannot miss the opportunity to have a global team through international hiring to make a difference. To add to this, it is also about how long you want someone to fill in the position and the cost-effectiveness of the hiring process. You also have to keep in mind the employee rules of the respective countries.
Germany and Ireland grant easy recruitment of freelancers, while in China, the labor laws make it difficult for employers to hire on a contractual basis. No written contract is required in the US, while in India, an offer letter has to be given to each new employee. This rule has its benefits and disadvantages for an employer. If an employee does not fit well into the organization’s culture, their employment can be terminated. However, in India, a fixed term must be mentioned in the contract before the employer cannot terminate the employee. On the other hand, the “at-will” termination by either employer or employee rule in the US can disrupt work. It may lead to repeated recruitment processes for a single position.
The difference between freelancers and full-time employees
First, let’s start with categorizing the two talent pools to help make the right decision.
Anyone joining your company for a defined period or a project can either be considered a freelancer or a contractor, depending on their role. Their work in your company ends as soon as the project is complete.
On the other hand, a full-time employee is a permanent part of the company who gets a monthly remuneration. They are more invested in the company, given that they need to know about all aspects if they wish to grow their career and make an exceptional contribution.
Know your requirements – when to hire freelancers
Having a full-time employee is more feasible when you have a project or product that will continue for years to come. However, hiring a freelancer makes sense when you have a lot of flexibility and work on something in parts or need distinct skillsets for a shorter duration.
For example, a software that comes with multiple aspects requires a different skillset to complete the final product, further requiring the talent for a short duration only. Opting for tech talent on a freelance basis is not cost-effective here, but you also get to explore a pool of talent out there without committing for an extended period.
Challenges of hiring a freelancer
Having mentioned how valuable freelancers could be, they each come with their aspect of challenges. Let’s look at a few closely.
- Distinctive process of the interview: Recognizing the candidate’s talent and passion for work is the gist of any interview process. And it becomes more crucial in the case of hiring freelancers. There should be specific assessment tools and specially framed interview questions for freelancers. This is because you cannot evaluate the seriousness of an employee who works from home. The freelancer needs to be self-motivated and have the willpower to work as efficiently as one does at the office or workplace.
- A large number of job applications: You might receive an overwhelming response from highly talented freelancers once your ad for the job is posted. It can be strenuous to select and pick one among the many worthwhile profiles. Here, the key to getting the right candidate is to choose the profile that can fulfill your job requirements.
- Payment issues: Freelancers are paid differently for different organizations. So keeping track of the payments in an organized manner is essential to avoid any payment issues. This becomes more critical if the money has to be transferred to the freelancer who resides in another country. You will then have to note the cost you have to bear to transfer the amount.
- Unambiguous work description and effective platform for feedback: Two-way communication is the essence of freelance jobs–one where the freelancers can clarify their doubts related to the work assigned and another where the clients can provide effective feedback to the freelancers. It is beneficial for both the freelancers and the clients as the client will get the same result as they would expect from the freelancers, and the freelancers can upgrade their skills and provide a better quality of work.
- Cultural differences matter: Different countries have different ways of communicating. Understanding the right approach to communication can elevate the quality of work through better verbal interpretation. This will make the workflow consistent and convenient for both the freelancers and the clients.
- Lack of dedication: Freelancers are free to take up other projects while they are connected to your organization. They prioritize their tasks according to the work quality and pay scale. Ensure good quality projects for your freelancers, so they are enthusiastic about working on your project. The payment must also be fair and aligned to the standard price being paid for the freelancers.
Challenges of hiring a full-time employee
Hiring a full-time employee is no easy task. While you are contemplating both aspects, let us also look into the challenges of hiring a full-time employee.
1. The cost:
Unlike a freelancer who’s in for a short duration, most employees seek long-lasting monetary benefits for their talent and work. This challenge is a crucial point to consider since many countries follow strict norms that might lead to you shelling out more than you anticipated. Like in the Netherlands, the employer has to grant a ⅓ amount of monthly salary for the service provided each year on termination. In Switzerland, the employer has to pay an additional 25% on the employee’s hourly pay if they have worked overtime, which exceeds the constitutional limit, i.e., forty-five or fifty hours.
2. Attracting the right employees:
When it comes to a full-time role, discovering the right fit in a pool full of talent makes one realize how limited their options are. Quite often, you might not find the right person at the right time, leading to a degradation in work quality.
3. Engaging qualified employees:
A good employee will often be contacted by other companies, making it difficult for your attempts to stand out. In addition, employees with hard-to-find skills often consider more desirable roles, so you need to put extra effort into convincing passive employees to choose your company over your competitors and then retain them.
4. Hiring fast:
Unfilled positions cost money and can become a bottleneck, eventually delaying operations. Still, making a hire can take several months, depending on your industry, putting pressure on the human resource department.
5. Building a strong employer brand:
While a good brand helps you attract and engage better employees, it is a multi-faceted process that includes promoting your culture on social media, ensuring a positive employee experience, offering growth opportunities, and more. This constant and collective exercise challenges you to step out of your usual duties, a problematic aspect considering you might want to invest your time in growing the business.
Most importantly, consider the country you are hiring a freelancer or a full-time employee for.
Sadly, it is not only about what you seek for your company but also about the country and the norms and laws laid out there.
Rules differ for different countries. Hiring foreigners to work in Austria might require the employee to take work permission as per the Employment Act of 1975. However, European treaties allow citizens within European economic areas, EEA, and Switzerland to work without a work permit. Hiring in India must be cautiously carried out as issues might arise due to social and cultural sensitivities. A written document must be given by the employer at the time of recruitment, mentioning if it is a contractual or full-time position. Employers in the US need authentication for the employees they recruit. The employers need to fill a USCIS (US- citizenship and immigration services) Form 1-9 for every new employee they hire.
Countries like Singapore, China, Cambodia, India, and Germany have easy laws around hiring a freelancer for a temporary period. Countries like Luxembourg, Switzerland, United States, Australia, and Norway have great full-time employee benefits that might cost the company more than they would like, especially if it is in the initial phase of establishment.
Being mindful while analyzing the global market can save you from penalties and barriers by law. It will help in the expansion and growth of your business with minimum issues for hiring. While taking the final decision, it is imperative to consider if you are looking for someone temporarily or for someone who would invest in the company and help it grow like their own. As difficult as it sounds, once you have a clear idea of what you expect from a new team member, hiring someone becomes simpler.