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[ftdale]

Can someone here explain the factors involved, benefits, pitfalls, etc. resulting from a policy of hiring freelancers? On the surface, seems like it can result in significant overhead reductions, but what effect does it have on employee morale, loyalty, etc?

[Lisette]

Benefits: only hire people when you need the work; ability to use specialists and match their skills to the specific needs of the job; no need to fact in costs such as absence, work downturn, maternity, training (alghough some of these are probably covered in the day rate)

Risks: ability to find the resources you need of the right quality when you need them (your competitors may be enjoying the same upswing and take up all the freelancers before you can get to them); ability to control day rate; potential that you are paying a day rate that factors in 'down time' so if you hire all year round you are paying more than you would if you had hired them

Impact on employees: could lead to fear of job loss; can lead to disatisfaction with pay levels (if they think freelancer getting paid more per day)

Mitigation: to have a clear strategy as to when and why you use freelancers and to communication this to your own people; to have robust contracts with freelancers and put effort into your relationship with them

This should kick things off

[Tammy]

I think a lot depends on the company - its size, industry and history.

Generally speaking freelancers like being freelancers and they have sorted out a day rate that compensates them for the loss of benefits, pension plan, and the fact that they will not be working every day of the year.  So they would be totally relaxed about being hired as freelancers.

From the existing employees point of view you can get jealousy about the seeming high day rate - but some of this is because they either do not value or do not know the value of their benefits.  Also they do not factor 'risk' into the equation.

I am not sure, from an employers point of view if freelancers are always a good idea.  When they have a long term (permanent) need for the work to be done at a steady rate across the year (not high peaks and troughs) then it is generally lower cost to employ the person direct since they do not need to pay the 'risk of not working' premium since they, the employer, is carrying the risk.  When demand is very hard to judge then it can make sense to pass the risk of no work onto the employee and in this case a freelancer works out better. 

I guess their might be other situations where freelancers costs less than employees even having taken the risk into account - say, perhaps they are situated in a lower cost country or something like that.

[freeform]

Freelancers are best used when you need them. You have no overheads or employer commitments to concern yourself with but the day rate will be higher to account for downtime - as mentioned above. So, if you have a short term, or indeterminate, need then freelancers provide an answer.

A freelancer will never be a solution to a long term, full time requirement though. Their day rate will be well in excess of the salary you would pay - and - if they agreed to work at a comparable rate and regular hours then the lovely tax folk would likely consider them employed anyway.

I use freelancers all the time - but only for 2 purposes - to fill gaps in our knowledge and expertise and to help with overflowing workloads. Anything more long term or core to the business and I would and have hired someone.

[ftdale]

Thank you all for the replies. While the analysis seems to be a bit more clearer now, it's still in the balance. Guess it has to be decide on a case-to-case basis. I think I need to look this up somemore on the net. Maybe find some case studies and such. if I do find em, I'll post the links here.