Why Big Businesses Like to Hire Freelancers

Large companies have legions of employees to lean on for any number of tasks and projects. When companies have so many resources and dollars at their disposal, why would they hire jobs out to freelancers that don’t have a long-term attachment to the company? There are a handful of reasons, and understanding them could mean the difference between landing the highest paying gigs and wondering where you went wrong in your freelance career. Here are some top benefits big companies look for when hiring freelance workers.

No long-term commitment

Why would a company work with someone that requires no long-term commitment? The reason businesses make most decisions: to save money. When working with contractors and freelancers, businesses can hire top talent without an ongoing commitment to keep paying for many months or years in the future. With a freelancer, the payments stop when the project ends.

Before I was a freelancer, companies had to commit to paying me thousands of dollars every month indefinitely. If they didn’t, I wouldn’t have given the job a second look. But now as a freelancer, I am interested in shorter-term gigs if the price is right. A company may be willing to pay a premium to get a worker with the right skills for a specific project or two.

No benefits

As a self-employed freelancer, I have to pay the entire $1,000 per month for my family’s health insurance. When I had a full-time job, however, I looked to my employer to pay a big portion of my healthcare costs. At my last job, I paid $168 per paycheck toward my medical and $12.75 per paycheck for dental. The employer picked up the rest of the tab.

Now when I work for large clients, I don’t expect them to pay my health insurance. I’m not an employee, after all. This saves the company an average of $4,708 per employee per year, according to data from the Kaiser Family Foundation. If a company can hire ten freelancers instead of ten employees, that adds up to $47,000 in annual savings on healthcare alone, possibly enough to hire an entire additional employee.

Get what you pay for

When hiring employees, it is completely possible that your worker will just do the minimum to not get fired. Anyone who has spent time in the corporate world has come across employees like this. Some workers have a drive to achieve the best results for the company and get a promotion. Others are happy to coast along until retirement. This iconic scene from Office Space explains it perfectly.

“That’s my only real motivation, is not to be hassled. That and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.”

But as a freelancer, it is really easy to lose a job. No one has to fire you or put together paperwork. They just don’t hire you back. As a freelancer, you are motivated to do the very best work possible on every single project. In a way, this motivates freelancers to do a better job than employees. If a freelancer is being well paid, you know you will get a great result.

Freelancing is the ultimate meritocracy

Many companies claim to operate as a meritocracy where the best workers are promoted while worst performers are pushed out. There is nowhere that this culture is more prevalent than Silicon Valley, which takes pride in its merit-based employment.

Thanks to the challenges of hiring and firing, the level of meritocracy in The Valley and elsewhere is dampened. In some parts of Europe, it is so hard to fire someone that there is hardly any merit to promotions and employment. Companies with a heavy union influence also have challenges in operating with a focus on employee results and merit.

In freelancing, meritocracy is built right in. Instead of focusing on degrees and experience, hiring managers look at recent projects and results. Instead of getting promoted, freelancers can make the case for higher pay or move onto a company willing to pay more. However, slacking off and sending in low-quality results will quickly sour a working relationship. With a short feedback loop, freelancing is the ultimate meritocracy.

Freelancing isn’t right for everyone

Shortly after taking my freelancing full-time in 2016, I was on the phone with a client who shared that he had done the same a few years earlier. After six months, he was burned out from the uncertainty of where his next paycheck would come from and the constant need to sell his services to new clients. He is now happily employed as a content manager at a large media company.

Freelancing wasn’t for him, but I love it. That is proof that freelancing is great for some, but is not right for everyone. If you think the fast-paced, meritocracy of freelancing is for you, it’s a wonderful lifestyle. A year in, I can’t imagine doing anything else.

This article was submitted by Eric Rosenberg and originally appeared on Due. It has been republished with permission and does not constitute the views or opinions of Upwork.

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