Apr 04, 2018
In-House Personnel and Freelance expert; which is Cost-Effective?
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The number one factor most corporate establishments consider when looking at their options pertaining to the recruitment of personnel is the cost-effectiveness of the entire process. With all things said and done, there are ideally only two likely routes for a company to take when hiring to fill a vacant position or assign a specific duty.

 
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While the use of full-time employees is the widely-accepted norm in the corporate sector, it isn’t the only operating structure that can be used to carry out duties and execute top-priority projects. Thanks to the massive strides that have been witnessed in the tech sector, particularly in internet technology, the use of freelance experts has become standard practice, even more so that many businesses have succumbed to replacing their in-house personnel with the expertise of freelancers. 

A critical subject that, however, remains unclear is the real cost of either arrangement. To indeed find out which is the most cost-effective option, they both have to be laid down side by side and thoroughly assessed. It is, thus, essential that the overall cost of each option is wholly spelled out before an apt comparison can be made. 

Cost of Utilizing Full-time Employees

While hiring and applying in-house staffs for a variety of corporate duties does indeed have its own perks like proximity and accountability, the cost of maintaining such personnel arrangement may be far greater than the expected ROI. 

This can be attributed to the fact that most full-time employees are paid a sizeable annual salary that doesn't even include other allowances and benefits they enjoy as a result of being employed by their respective companies. Coupled with the fact that many of them still have to undergo elaborate training and orientation programmes before being fully able to perform their duties, it is not difficult to see why many corporate establishments are becoming more hesitant to hire in-house workers. 

Cost of Recruiting and Training In-House Personnel

There are reliable stats capable of backing the notion that the cost of hiring high-level personnel for a vacant position is often double the salary attached to the job. This is because the process of employment itself is quite cumbersome and can even involve the use of outsourced service that cost quite a substantial amount. 

A company’s hiring expenditure, however, doesn’t stop even after the recruitment has been done because the new employee still has to undergo a very thorough orientation and training programme before the individual can fully commence his or her assigned duties. With the duration of most corporate training programmes for new employees varying between 3-6 months, the cost of properly training a newly employed worker can range between half and a quarter of the position’s annual salary. 

Tax Payment

Another burden most corporate establishments have to bear is the payment of taxes on each member of its personnel. These taxes vary depending on the hierarchy level of the employee and of course, the robustness of the salary package. Regardless of the differences in the amount taxed on employees, a typical corporate taxation structure consists of taxes like payroll tax, social security, insurance, health, and workmen’s compensation. 

All these taxes are expenditures that a corporation must incur for each one of its staffs, which can indeed take a toll on its finances. 

Payment of Benefits

Despite having to pay salaries as well as the taxes attached to them, a company is still saddled with the responsibility of paying several benefits in conformation with the agreement between itself and its employees. These benefits include basic needs like healthcare, life insurance, transportation allowance and a 401K etc., and can sometimes also consist of luxury privileges like vacation and housing. 

The cost of catering to the benefits of an individual employee has been noted to be about 1.4 times the base salary, which is a commitment too steep for most companies to meet. 

Leave and Vacation

While these two elements don’t directly affect the finances of a company, the temporary absence of staff due to the mandatory yearly break can hamper the progress of corporate functions especially if the individual’s duties are left unattended to. Add to the fact that salaries and allowances still have to be paid during the break period and one will understand why more businesses are beginning to welcome the idea of running an entirely outsourced operation.

Cost of Utilizing a Freelance Expert

Freelancers have brought much-needed respite to the corporate world with most companies overwhelmed with the maintenance of a conventional corporate environment. Though outsourcing to a freelance expert isn’t without its own drawbacks, there is no doubt that it is still by far the most cost-effective option available to companies…at least until AI becomes affordable and commercially viable. 

When compared to the cost of using full-time employees, there isn’t really any debate on which provides the best corporate value. 

Recruiting and Training

Companies do not have pay much when recruiting a freelance expert since they usually make use of freelance platforms that are either free or affordable. With most platforms like Vulpith, charging less than 5% of a project’s value, the hiring parties do not have to worry about accruing extra charges. 

Corporations that also follow the route of outsourcing most often end up hiring a freelancer that doesn't need training or orientation. It is simply a case of plug and plays when it comes to the hiring of these professionals. 

Tax Payments

Another thing a company won’t have to worry about when outsourcing its duties is the payment of multiple taxes attached to the compensation package of a full-time employee. Since the platform being used for the outsourcing transaction bears any taxation cost that may arise, the parties at both ends of the freelance spectrum do not have to incur any extra cost.

Benefits and Vacations

Not only is a corporate establishment not bound to pay benefits to the freelancers, the company can also demand the individual’s expertise at any time of the year. This arrangement doesn't only cut down on costs, it also improves efficiency without sabotaging the customer-client relationship. 

Outsourcing, however, isn’t without its share of blemishes since the basic cost of hiring an expert freelancer supersedes that of employing someone in-house. The addition of taxes, benefits, and other allowances, of course, ends up cushioning the latter to surpass the outsourcing route. The excess availability of freelance experts in the outsourcing market is also responsible for the imbalance in the supply and demand of corporation tasks, and this, in turn, has led to a huge drop in the valuation of a freelancer's skills. 

 

Category : Work Quality
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