According to experts across the recruitment industry, the gig economy is not just here to stay, but it continues to thrive and grow. In some cases, it is even predicted to overtake traditional employer-employee relationships. Now making up 47% of the global workforce according to the World Bank, hiring freelancers is a popular expansion strategy.
However, when hiring freelancers, independent contractors, or consultants, it’s important to remember the risks and considerations. While there is much to be gained from the gig economy for an adaptive business, anyone looking to take the dive must ask themselves: are we ready?
Understanding the Shift towards Non-Traditional Corporate Structures
The gig economy, a loose group of various types of workers, from high-level consultants to casual, temporary contractors, provides companies worldwide with specialist skills or cost-effective labor on a project-by-project basis.
With remote work, the lingering effect on workplace culture due to the COVID-19 pandemic, and an overall loss of faith in the traditional employment relationship, workers and companies are seeing the benefits of a non-traditional working relationship and a hiring freelancers at an amazing rate.
In some ways, it seems like a simple choice for all parties involved. Employees-turned-freelancers can set their own hours, pursue work that interests them, stay apart from work culture, and exercise greater control over their daily routine and career.
Companies using freelancers are free to seek specialists to deal with specific problems without hiring untrained full-time employees and all the extra responsibilities they bring.
The Shift to Gig Workers
And this is happening globally, with one of the rising stars of the gig economy, Fiverr, predicting that a majority of business owners will now turn to hiring freelancers, especially in times of economic downturn.
The picture may not be so clear-cut in terms of the predicted rise of the freelancer. While 47% of the global workforce is indeed self-employed, this represents a significant fall since the modern high of 55% in 1999.
Instead, these workforce trends are more revealing on a national and regional level. According to the World Bank, the proportion of self-employed workers is more likely to increase in developing markets as more companies turn to hiring freelancers due to cheap labor costs in these areas.
It might be better to say that companies worldwide are interested in hiring freelancers from more countries than ever before. In a sense, this is the next wave of globalization aimed at avoiding the currently competitive hiring markets of the developed world. But how ready are these companies to deal with the effects of international hiring? And why specifically are freelancers being sought abroad?
The Appeal of Hiring Freelance, Consultants, and Gig Work to Recruiting Companies
Hiring freelancers, particularly those in developing markets, represents a quick way to use highly qualified workers for defined periods without the complications of a fixed-term employment contract. Thanks to the business-to-business nature of an independent contractor agreement, freelancers can be hired internationally without local entity structures in your countries of operation.
Thanks to modern technology, too, there’s now less and less standing in the way of an efficient working relationship with those in countries with much lower labor costs.
As a result, there are numerous benefits to hiring, freelancers, contractors, and consultants. Below, we’ve compiled a list of 5 of the most common pros (and 5 of the biggest concerns) to hiring freelancers internationally.
The Advantages and Benefits of Non-Traditional Work Arrangements
Flexibility and Scaling
Hiring contractors, freelancers, and consultants allows a business to adapt quickly to changing workloads and project demands. Professionals can be brought in for specific projects or tasks, with international contractors being perfect for quick introductions to the local market without requiring a large investment.
This enables businesses to scale their workforce up or down as needed without a long-term commitment or the overhead costs associated with full-time employees.
Access to Specialized Skills and Expertise
Contractors, freelancers, and consultants often bring high specialization and expertise earned by years of working in their respective fields. Furthermore, they often don’t need training which can save you in management hours.
Working with freelancers allows businesses to tap into specific skills and learn about the latest industry trends and best practices from seasoned professionals.
Cost-Effectiveness in the Short-Term
Hiring contractors, freelancers, and consultants can be a cost-effective solution as, unlike full-time employees, these professionals are typically paid on a project or hourly basis. This eliminates the need for additional costs such as benefits, insurance, and office space.
By avoiding these expenses, businesses can often reduce their overhead costs significantly, allowing for more spending on growth requirements.
Enhanced Focus on Core Competencies
With an overall trend towards a focus on skills during hiring, engaging contractors, freelancers, and consultants allows businesses to focus on their core competencies and strategic initiatives.
Outsourcing tasks or projects to experts means you can allocate internal resources more efficiently, ensuring that their key personnel can concentrate on high-value activities and core business goals.
Fresh Perspectives and Innovation
Contractors, freelancers, and consultants bring fresh perspectives and new ideas to the table by joining an existing team. Their exposure to various industries and clients provides valuable insights and innovative problem-solving.
Contractors can shake up a team that has become set in its way by bringing different experiences and viewpoints, challenging existing norms, and encouraging creative thinking.
The Challenges and Considerations for Companies Hiring Self-Employed Workers
Integration and Communication
Contractors, freelancers, and consultants are external to the company, and in fact, in many countries, there are severe restrictions on how a company may deal with them. For example, companies keeping confidential information may have to put extra guards in place if hiring freelancers. This can present challenges in terms of effective communication.
Establishing clear communication early on is crucial, as is providing necessary project details and context. By fostering a collaborative environment as a standard, you can ensure everyone is on the same page and working towards common goals.
Managing Deliverables
Global expansion expert Wei Hsu states, “Setting clear expectations and defining deliverables is essential when hiring freelancers. With no managing authority over them, it’s important to clearly outline the project scope, timelines, milestones, and expected outcomes.”
Misaligned expectations can lead to delays and satisfaction problems. Everything important should be clearly written into a contractor work agreement, and regular communication, progress tracking, and status updates can help mitigate these challenges.
International Legal Compliance Considerations
Hiring contractors, freelancers, and consultants involves legal and compliance considerations. Especially when working internationally, businesses must be prudent around contract agreements, tax obligations, and intellectual property rights regulations.
You must always ensure compliance with relevant laws and consult with legal and HR professionals when necessary. The right support can mitigate any legal risks and ensure proper documentation and agreements are in place to avoid misclassification errors.
Quality Control and Performance Management
External agents, contractors, freelancers, and consultants may require different kinds of oversight to ensure the quality of their work. This may become especially tricky with hiring freelancers who are experienced or highly-specialized. Ideally, his process should begin during the hiring stage with reference checks.
If introduced early, establishing ways of monitoring progress and implementing periodic reviews or checkpoints can help maintain quality control.
Cultural Fit and Alignment
Contractors, freelancers, and consultants may not have the same exposure to a company’s culture, work environment, values, and internal processes as full-time employees, particularly when hiring abroad. It may be essential to assess cultural fit during the hiring process and provide clear guidelines on how to align their work with the company’s vision and objectives.
Regular feedback can help bridge gaps and foster collaboration, but be careful about how this communication is shared.
4 Ways You Can Better Integrate Hiring Freelancers, Contractors, and Consultants into Your Global Recruitment Strategy: Top Tips from INS Global’s Head of Global Recruitment Jeida Boussenina
Determine Your Hiring Needs
Who you’re actually looking for will depend on a number of factors. Your operations in a new market may benefit more from a contractor if you aren’t yet sure if there are long-term opportunities in that market.
Ensure your hiring staff members have clear and constant lines of communication with the department heads and team leaders that they’ll be hiring freelancers for. Also, consider that proactive recruitment strategies may require you to think long-term and or hire for positions or projects that don’t actually exist yet.
Educate yourself on local management practices for Gig Workers
Provide line managers and HR staff knowledge about the limitations of working with a workers with an independent contractor status. This may include making sure that they’re aware that they cannot control their hours, force them to take on a project, etc.
Depending on where you will be placing workers, you will also have to weigh your options in terms of taxes, payment options, and benefits. If your project is working on a tight budget or if you are going to be working in a country with particularly high employment taxes or worker compensation costs, you may have to rethink how much you need an employee vs hiring freelancers.
Post on Dedicated and Relevant Job Boards and Build up Your Talent Pool in Advance
Because of their specific skills and working conditions, standard job boards might not be the best way to search when hiring freelancers or gig workers. Each country will have a number of sites or services particularly created for contractors in addition to those built for employees. Do your research or find a service provider with the local expertise to point you in the right direction to save yourself time.
Never be afraid to ask if you can keep a contractor’s details on record for future projects. Even more so than employees, a contractor may not be right for the project you’re doing right now, but they could be perfect later.
Be Very Selective – Create a Recruitment Process and Assessments Specific to Gig Workers
Standard hiring processes may not be well suited to the search for gig workers. As contractors or consultants will be used for specific projects or will be bringing specific skills to a team, your search and recruitment process should be aimed at these needs above all others.
Some basic elements of a recruitment drive, like checks to see if a worker fits into your company culture, will likely be unnecessary due to the distance or independence with which a contractor will be working.
How INS Global Can Help Your Business Work with Independent Contractors, Hiring Freelancers, and Consultants Around the World
INS Global has provided HR solutions and expansion support to companies of all sizes across numerous continents and industries for over 15 years.
We can assist you with hiring freelancers or employees, recruiting, payroll, Professional Employer Organization (PEO) services, EOR services, and invoicing in all your target markets. We help companies worldwide develop their operations and enter new markets quickly, effectively, and safely because we know what is needed to make global expansion work well.
Strategically located around the world, our recruiting professionals have the experience and local understanding needed to adhere to every standard, incorporate every best practice, and streamline every aspect of global hiring.
So, contact INS Global today to discuss your hiring needs and move your global projects forward.
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