A Cost Comparison

Often, companies cannot immediately fill open positions. One solution we frequently recommend is the temporary hiring of freelancers to keep project-related tasks moving. However, some companies hesitate due to seemingly high costs.

But what does the reality look like?

In this blog post, we explore where companies can save costs by hiring freelancers and in which cases higher expenses might arise, providing you with a comprehensive overview of the actual costs and benefits.

1. No Social Security Contributions

A significant cost factor for hiring full-time employees is social security contributions. Employers must pay contributions to health insurance, pension insurance, and unemployment insurance. These contributions can add up significantly and greatly increase labor costs. For freelancers, this cost is eliminated as they are responsible for their own insurance, leading to substantial savings for the company.

2. No Additional Payroll Costs

In addition to social security contributions, full-time employees incur other payroll costs such as contributions to accident insurance and company pensions. These additional costs are entirely avoided with freelancers, who manage their own insurance and retirement plans.

3. No Paid Vacation or Sick Leave

Freelancers are not entitled to paid vacation or sick leave. Full-time employees generally have the right to several weeks of paid vacation per year as well as paid sick leave. Freelancers, on the other hand, are only paid for the actual work performed. This means that companies do not have to cover any downtime and only pay for productive hours.

4. No Long-Term Commitments

Freelancers are often hired on a project basis or for limited periods. This offers companies the flexibility to scale their workforce as needed without long-term commitments. With full-time employees, notice periods and severance payments can result in significant costs. Freelancers help companies avoid these costs and obligations.

However, the downside is that freelancers can leave the company at any time without notice if they receive better offers.

5. Lower Infrastructure Costs

Freelancers frequently work remotely and use their own equipment and infrastructure. This reduces the need for companies to provide additional office space, tools, or IT equipment. These savings on infrastructure costs can be substantial, especially in an era where remote work is increasingly prevalent.

6. Reduced Administrative Burden

Managing full-time employees requires additional effort and costs, such as payroll processing, HR management, and employee training. Much of this administrative work is eliminated with freelancers, allowing companies to focus on core tasks and utilize their resources more efficiently.

7. Efficient Resource Utilization

Freelancers are typically hired when there is a specific need. This enables more precise and efficient use of resources. Full-time employees, however, must be paid even during less busy periods, leading to unnecessary costs. With freelancers, companies only pay for actual work performed.

8. Specialized Expertise and High Productivity

Freelancers are often highly specialized and can complete projects more efficiently and quickly due to their expertise and experience. While a freelancer’s hourly rate may be higher than that of a full-time employee, the overall project costs can be reduced through the freelancer’s higher efficiency and productivity.

Conclusion: Are Freelancers Really Cost-Effective?

Working with freelancers offers numerous financial advantages for companies. By saving on social security contributions, additional payroll costs, and administrative expenses, as well as benefiting from increased flexibility and efficiency, companies can better utilize their resources and reduce costs.

FRATCH helps companies find and manage the best freelancers efficiently. With our AI-powered recruiting assistant FRATCH GPT, you can find your freelancer within a few hours - ready for an interview.

The best part is that in 20% of cases, our freelancers are also interested in transitioning to a full-time position.

Learn more about the benefits of working with freelancers and how FRATCH can help optimize your freelancer hiring processes and reduce costs by up to 75%. Visit us at FRATCH.IO and discover the advantages of our AI-powered recruiting.