In the US, over 70% of SMBs have trusted freelancers to work with them, and a majority of them agree that independent workers have helped them improve their business. And it’s not just small businesses – according to statistics, Upwork connected about a third of Fortune 500 companies with freelance talent. These numbers reveal the extent to which independent professionals can help businesses. Yet many companies are still unsure about moving beyond traditional employees. A big reason for that is a consistent hiring myth, which we will debunk below.
When it comes to the HR side of working with freelancers, Charipickers are great experts: Ian de Swart kindly shared his thoughts and observations with us. According to him, many companies
ask the wrong question
They are too focused on whether they should hire from the internal or the external workforce. And when they do hire, they put too much weight on the type of contract they want with the worker.
Ian stresses that the right question companies should ask is instead how much value the worker can bring to the organisation! Everyone should recruit people based on talent and capacity and not on contract type. His advice to anyone hiring would be: focus on talent and on what helps you to succeed, and stop talking about fixed vs temporary contacts.
Once hiring managers overcome this barrier, they are often further discouraged to trust freelancers due to
one big myth
They believe hiring independent professionals is more expensive than using traditional employees.
Now, if we consider the hourly rate of competent freelancers versus the cost of an employee per hour/day, then yes, it may seem like paying €300 per hour for a freelancer is too much. However, the picture changes when we talk about the Total Cost of Ownership.
When you work with freelancers or contractors, you ONLY pay their project fee. They then take care of their own taxes (which saves you time and money), their own social contributions, insurance, and other expenses.
On the other hand, the payslip employees get is not the full story. When you have fixed contracts, you are liable for many administrative costs, such as payroll taxes, social contributions and other expenses, determined by your country’s laws. All these expenses also take time away from your HR and Accounting teams, which can be spent on other projects.
Furthermore, you still need to pay employees when they are on holiday or on sick leave, while with freelancers, you are only paying them for the time they spend working on your project. Independent professionals are much more productivity-conscious, and will give you better value for your money.
Ian has discussed this topic with us in more detail – if you are interested, have a look at his article on Total Talen Acquisition.
Often the price myth is not the only concern corporations have regarding independent professionals. During our conversation with Hannah Young from CXC Global during the FBM, she also shared information on the
dangers of compliance
As the risk of employee misclassification can lead to legal problems for the company, it is understandable that hiring managers are worried. Legislations like the IR35 in the UK are cracking down on dishonest companies, and are adding more pressure on businesses to be clear and transparent when working with the contingent workforce.
Hannah advises companies not to let this discourage them in their hiring strategies. Instead, they should familiarise themselves with the topic and in need, turn to legal teams to support them. If you’d like to know more about the legal side of hiring contingent workers, visit CXC Global for more information or check your risk level with a few clicks using their free Worker Misclassification Risk Diagnostic Tool.
As we see, there is still a lot of hesitancy from companies who want to turn to external talent. As with every major shift in an established industry, there will be challenges and resistance, but it is our duty as independent professionals to carry on highlighting the benefits of the freelance workforce. This way we will slowly see the ice melt and more businesses turn to the power of independent workers.
