The gig economy allows founders, leaders and managers to deploy capital in more efficient ways, i.e. we can "get shit done" for cheaper. However, there is no course in college (even in MBA) that really prepares you to work with freelancers. So, we're on our own. For me, working with freelancers started with a few excel sheets, back in 2014.
A short story
At the time, my friend Naresh and I used to run a school program called Book Lovers' Program for Schools (BLPS). More than two hundred schools across south India had purchased the program. Our program had 4 sub-components, which the school could customise:
- Sales: Our books which we had written and published
- Sales: Books we bought from other publishers
- Services: Workshops for teachers - where our team would go to the school to conduct workshops
- Services: Days of Stories - visits to schools where we'd go to classrooms and run the program ourselves.
We started sales in 2012, and in the next 3 years, we made a loss of ₹50 lacs. We were bootstrapped, and not looking for VC money, so we had to turn this around and make it work.
Enter excel sheets! We poured through every expense and made detailed models. All of what we learnt boiled down to three actionable points:
- We need to improve sales across the board and also across individual SKUs - okay that one is pretty obvious since “Sales fixes everything.”
- We realised that we could save 30% on our travel and stay costs if we booked 4 weeks in advance. This required us to work with the school and freeze dates well in advance.
- We needed to cut program manager costs. Could we hire freelancers instead of program managers?
Let me zoom into that last point.
Freelancing to save costs
A program manager at BLPS would earn ₹3.6 - 4.2 LPA. Once we added hiring expenses, training costs, and office overheads, this amount would increase to ₹4.8 -6 L. These program managers would travel to schools to execute the service components of BLPS. But they could travel only for about 80-100 days - on those days when schools didn't have exams, sports days, annual days, vacation days, etc.
On a per-productive-day basis, we were spending ₹ 6000 per program manager per school day. Contrast this to our employee's per day salary: ₹ 4,00,000 per year divided by 260 working days in a year = ₹ 1615.
To tackle the expenses better, we introduced a freelance program in 2014. We hired freelancers to work with us on a day-basis at an average rate of ₹2000 per day. This was higher than our employee's per day salary and yet it worked out cheaper.
If we replaced 2 out of 3 school days with a freelancer, we reduced costs from ₹18,000 to ₹10,000 -> 45% saved. By 2017, we were profitable.
Compared to total employee costs - salary + hiring/training + overheads - assume 1.25 times salary, freelancing almost always works out cheaper - even when expensive freelancers are hired.
Freelancing offers access to skills
In complete contrast to the BLPS story, we hire freelancers at CoreVoice for a different reason - to expand our competencies. As a consultancy which works with multiple clients, we often have tasks that don't add up to a full time job. For example, in the last 1 year we needed an ad-film writer for just 2 projects. That's not enough work for a full-time job. Yet, offering creative ad films to our clients is something we do!
We also needed a content strategist for 1 project, a UX/UI expert for 2, an SEO consultant for 1, writers for 3 projects, and so on. In each of these, we hired highly skilled workers - who we may not have been able to hire. By leveraging the power of freelancing, we had access to multiple skill-sets and were able to be flexible with their growth plans. Teams across companies can benefit with such thinking.
Much as I am tempted to create a listicle "10 reasons why you should hire freelancers," I really think there are just 2 reasons: (a) cost saving and (b) access to skills.
The gig economy is here to stay
Every year, more skilled workers are switching to freelancing as their main source of income. Many are moving out of cities. They are working from across the world. They are choosing flexible workspaces.
This trend has been accelerated by the pandemic. The rise in freelancing is so large that it is already hard to hire employees the traditional way in many professions, e.g.: content writing. As leaders, we have to become really good at hiring and managing freelancers, otherwise we'll be toast.
Tips on Hiring
Types of freelancers
In my experience, and that of CoreVoice collectively, we've noticed that freelancers are uniquely different on these axes:
- Professionalism: Some freelancers will be communicative, prompt, and will update regularly. But not all.
- Price: Not only do freelancers price differently, they also use different pricing models. Some bill per hour, others per project. Some collect upfront, and others at the end of the project.
- Competency: Freelancers come in all points on the spectrum from novice to expert.
- Ambition: There are freelancers who take only a few projects and are comfortable with that. Others take on a lot of concurrent projects and sub-contract.
At CoreVoice, we like to hire freelancers who are high on professionalism and competency and moderate on ambition and price. During his long freelance career, Amrit fit this description - so that's the one we're most comfortable with. Additionally, we feel that freelancers who charge too less - they are often low on professionalism and competency. When we hire such individuals, we need to spend a lot of time and energy to get work done. Our anxiety levels are always high during these projects.
Sourcing trustable, competent, and affordable freelancers is always a challenge, just like sourcing full-timers. At CoreVoice, many of us have individually worked with freelancers for many years - so our network is pretty solid. Additionally, we continuously network with talent. Whenever we meet someone we might like to work with, we strike a conversation and keep in touch.
Most freelancers are always open to talking and exploring. So a good time to start building a network is right now. You don't need to wait for a project to get started.
Alternatively, companies source freelance talent from websites like Freelancer and Toptal, or use specialised services (like Pepper Content for content projects). This method has never really worked for us. We've tried, and will continue to try in the future.
Preparing to hire
The first step in hiring a freelancer is to write a project brief. A good project brief should have the following:
- A clear Objective: If the project objective is articulated clearly then the freelancer can contribute meaningfully.
- Deliverables, with timelines: Clearly stating these will help freelancers plan their efforts efficiently.
- Budget: Clarifying how much you're willing to spend will attract the right freelancers and save time in the hiring process.
All of this must be written down. Without this, your freelance project is set up to fail. If defining the project is not possible, then execute the project internally. But if that's also not possible, hire a freelancer who is OK with ambiguity - but be prepared to pay higher fees.
Minimising the risk of a failure
The conversation around getting freelance work done is dominated by negative experiences - projects that failed, freelancers who ghosted clients, etc. Definitely, it hurts (both parties) when a freelance project fails. Money/time is wasted.
One can take comfort in the fact that, as managers, we "waste" money/time on employees all the time. Organisations aren't meant to be extremely efficient because then they would be fragile to external shocks. Even with that in mind, and further acknowledging that every failure is a learning experience, no one starts a project with the intent to fail.
So, here is a helpful checklist to minimise freelance project failure:
1. Make sure the pricing works for everyone
For many of us, bargaining is an instinct - we want the best rate. But you have to keep in mind that a freelancer looking to sign up with you may be OK with your rate on day 1, but she has to be OK with it as the project continues. If the rate is not working for her down the road, she will look to cut corners. Or she will ghost you. Simple.
2. Sign a contract and stick to it
Creating an official document of engagement and signing on it forces each party - you (and your organisation) and the freelancer - to mutually agree on certain terms. Do not start any engagement prior to this step. When drafting the agreement, ensure that you've "filled the gaps," i.e. you've written down what happens if the project fails at any stage. Once agreed upon, and signed, follow the contract to the letter. Or if there is a change needed - agree on the new terms again and sign it again.
3. Invest in a healthy working relationship
Freelancers are human beings with needs and wants (other than money). Maybe they want to work during office hours only. Maybe they prefer emails instead of phone calls. Some may want to be part of meetings. Maybe they are moonlighting for a second source of income. For others, it's their main business. Some freelancers have just started out and appreciate guidance and warmth. Others are experts who would like to just get the damn thing done. Just as employees come in all shapes and sizes, so do freelancers. Lack of empathy, trust deficit, etc - these are recipes for failure.
4. Don't change the team midway
Changing project team members (especially the senior ones) can create an atmosphere of uncertainty for the freelancer(s). This can cause the project to derail - either immediately, or with a delay. If the team has to be changed, then the project has to account for extra time for everyone to re-adjust to each other.
5. Don't beat a dead horse
If the project is not working, and the freelancer is not able to deliver - either because of lack of skill / will / time - just let it go. This is one of the supreme joys of working in the gig economy - if it doesn't work, both parties can move on without judgement. "Hey, sorry it didn't work out this time. Let's close this contract early - as per the terms agreed earlier. Hope we can work again in the future on a different project."
Bring it all together
Over the last decade, I have worked with over two hundred freelancers and it's mostly been joyful. Via these amazing humans, I've been able to achieve more than I thought possible. But it's taken a lot of effort to learn how to work with freelancers. And I empathise deeply with those who have had trouble working with freelancers - it's not easy. But it ain't hard either.
Ah well, let me know what you think, and how getting work done via freelancers has worked for you.