1 Feb 2023
Our two cents on when to hire an in-house employee, an agency or a freelancer.
As an agency, we have hired employees, a couple of freelancers over the years, and other agencies. Is there a more challenging decision than choosing which to hire? I'm sure there is, but this one is rather daunting too.
Partly because one doesn't know what to expect of each. Partly because one doesn't know the ups and downs of choosing one over the others.
Based on our experience working with all, this is our take on when we see fit to hire different types of resources, depending on the circumstances, team capacity, needs, and budget. What are the advantages and disadvantages of choosing one over the others?
The competency of any resource comes down to 3 main factors: Quality, Speed and Price.
But generally, you can only have 2 out of those 3. Very rarely can we/you find someone who touches all three mantras flat out. To put it visually, it would be something like the image below shows. Such a person would be really cheap and really fast but would lack the quality bit entirely.
Obviously, life doesn't work this way. Not in such a polarising manner. Instead, it is more of a fluctuation, a tendency that can be represented as a blob-like circle that shifts more in favour of a particular area within the containing circle. Still a generalisation, but with this blob-like model, such a person would fluctuate more in the direction of Price and Speed, leaving quality a bit behind but not completely worthless.
Looking at Agencies, Freelancers, or in-house employees, each of them will give you something the others don't. But one thing is certain, none will fluctuate towards the centre of the containing circle.
So, still, as a rule of thumb, if we were to lay them all down, Agencies would fluctuate more towards Quality and Speed, whereas Freelancers would shift in favour of Speed and Price, and In-house employees would lean towards Quality and Price.
Again, this is nothing more than a stereotypical representation of each resource. Depending on the Agency, Freelancer or In-house you hire, you may have a completely different experience than we do. Use this as a broad view, not as an absolutely realistic one.
Of all, Agencies are the most expensive ones. Let's just clear this out of the way because there's no way around it. On the bright side, they offer quality and speed, generally better than all the others.
Working with a team of people gives you a compound of skill sets dedicated to your project that you would otherwise have to hire separately. Product Design, Web Design, Product Strategy, Web Development, Mobile Development, Back-end Development, or whatever more services the agency offers.
Even better, agencies offer the experience and the processes that leverage each person's strengths for different phases.
To top it up, agencies often include Project Managers as part of the deal. This takes the hassle of managing a bunch of people off your to-do list.
However, don't hire an agency if you are tight on budget or playing the long-term game. Do so if you are looking to get excellent quality quickly.
Reliability, accountability and trustworthiness. Agencies have a reputation to uphold, they won't just vanish on you. As an established organisation, Agencies are accountable for their work and, assuming they have been in business for a few years, they are inherently worth your trust.
A broader range of services. You don't have to hire an army of people to cater for everything you need. Time-efficiency.
Less hassle. Agencies manage the entire project for you, so you don't have to manage a regiment of people by yourself. This is time efficiency too.
No pauses. If someone gets sick or goes on leave, you'll still be covered by other people (guess it influences time efficiency as well).
No commitment. Underperformance? No problem. Just let them go.
Speed. Well, on top of all the other time-efficient topics, Agencies have established methodologies and processes that enforce projects to run in an orderly, timely fashion.
One-stop shop. Agencies have a team that handles the requirements, from the definition until the final delivery.
Cost. Yep, it can get expensive, especially when the scope changes and as iterations go by (for those who don't do fixed prices).
Agencies are a business. Such as your business, the agencies must be profitable – they need to pay rent, employees, equipment, and whatever expenses they have. As a result, there's always the underlying pressure of making money from you.
Freelancers are of great value for quick, specialised tasks at a reasonable price. They leave quality to trail behind, though.
Working with Freelancers gives the immediate response you are looking for to solve a specific task. Freelancers are great for filling-in resourcing gaps as well. In need of extra, not over-expensive, manpower to push deliveries forward? Go with a freelancer. This is a no-brainer.
Freelancers give you the instant solution you are looking for, generally at a reasonable cost. On top of this, there's no commitment. Just let them go when their services are no longer needed.
To top all this up, Freelancers are typically flexible, quickly adjusting to your needs and priorities. However, Freelancers fall behind on quality. This doesn't mean they are not talented individuals. Quite the opposite, really. Instead, the nature of their work demands jumping from project to project, which forces them to keep things shallow – they are typically not given the time nor the opportunity to understand, focus, and go into the deep end.
Hire Freelancers if you need an immediate response at a reasonable price. Hire them if you need to fill in your extra resourcing needs. Don't do so if you are looking for an in-depth build or definition of your product or project. The best option to hire a freelancer is to do so for a specific purpose once the foundational elements are set.
Adaptable. Freelancers typically have the capacity to adjust to your timelines and needs quickly (this accounts for time efficiency).
No training is needed. It is like plug-and-play. Hire a freelancer for specific tasks, and the output will be almost instant (time efficiency too).
Fill in the gaps. Hire a freelancer to solve instant resourcing needs. Best of both worlds: quick to hire, fast time to deliver (time efficient once again).
Speed. Well, I guess the three points above say it all.
No commitment. Underperformance? No problem. Just let them go.
Cost. Not only are their rates typically lower than agencies, but you are free from dealing with insurance or leave arrangements.
Relationship development with time. Freelancer can be like an employee. Over time, the relationship will be developed and will grow strong.
Quality. According to Fiverr, freelancers juggle between 2 and 4 projects simultaneously. Given the nature of their life, they can't be fully engaged and devoted to your project. This will be reflected in the output quality.
Reliability. If a freelancer gets a bigger, better-paying job, you may be left hanging.
Sick or on holiday, the project comes to a halt.
More hassle. Managing the project and the army of freelancers lies on your shoulders.
Higher risk. Given the volatility of the Freelancing life. According to Fiverr, only 23% of them believe they are more financially stable than they were before freelancing.
In-house employees are by far the best, most financially sustainable option in the long term. On the flip side, they are the worst for fast results.
We always choose to hire in-house employees when weighed against sub-contracting an agency or freelancers. This is because we have a well-established team and deep-rooted methodologies and processes that allow us to train new employees effectively. On top of this, we prefer to mould our team members to our standards of quality – which are really high and hard to find off the shelf, either in a Freelancer or in another Agency.
If this is your case as well, hiring is the way to go.
There are two exceptions to this rule. First, if there's a requirement we can't fulfil, but the client still prefers us to hire and manage a third-party entity on their behalf. Second, whenever we need a quick resource to fill in a specific project need.
With In-house staff, you get better quality because this person will benefit a lot from experiencing the ins and outs of the company and its processes. However, this takes time to achieve, which puts the time to deliver in jeopardy. On the bright side, it may take longer to get there, but it gets there at a lower cost.
So, hire an In-house employee if you have the capacity to train them and you can afford the time it takes to achieve the quality standards you are looking for. On the other hand, avoid hiring if you must progress on many different things simultaneously and quickly.
Cheaper. Salaries are way less expensive than Agency or Freelancer rates.
More flexibility turned cheaper (yes, cheaper again). No matter how many changes in scope, iterations, or complexity, the cost will remain the same. This inherently makes it more flexible for you. And less stressful.
Suitability. You can hire and train an individual according to your needs.
Quality through continuity. With time comes quality. You have an open road ahead to guide an individual to the quality standards you set without being constrained by costs.
Culture and motivation. Building a team allows you to build a culture for your company. An environment of your own with people you hand-picked. This helps to keep people engaged and motivated.
Organisation control. Hiring your own staff allows you to run and manage the team more easily without depending on a third-party agenda.
Hiring. Hiring is tedious, takes a lot of your time, and is unpredictable.
Harder to hire quality. Finding the right individual is hard. Finding the talented, right individual is even harder. We can tell from experience.
Time-consuming. Not only must you go through the hiring process but also onboarding, training, and development until they are ready to be independent.
Speed. From posting the job opening to having a productive folk takes ages.
Engagement. When you hire someone, you are bound from a legal standpoint. In the event of underperformance, you are tied to that person.
Ultimately, choosing between the three options comes down to the context you are sitting in. If you are a well-established company with an organised team, Design System, and code base, hire in-house. This one should be a no-brainer.
Go for a freelancer if you need something specific, well-defined, commitment-free, done quickly and relatively cheap.
If you want to create a solid, consistent foundation for your product, design, or code base, or for broader help than just one specific task, commitment-free, with less hassle, quick and with added quality, agencies are your best bet.
Regardless of your option, take your time to find the right partner. Treat hiring Freelancers and Agencies as you'd do to hire an actual employee.
In some cases, after a certain period of collaboration, we recommended our clients to shift towards hiring their own employees. We have even helped them transition, training the newcomers, and then we set sail. Once the foundations are created, we have enough confidence to hand over our deliverables to other people, sure that consistency and quality will be preserved, saving our clients some money in the process – if they want to, naturally.
Thank you for reading through.
A long time ago, Rui decided to put his glory days as a Designer behind his back to embrace the Managing Partner role at Significa. He believes himself to be the deserving Significa 2020, 2021, and 2022 Cook-off champion and is having a hard time acknowledging the truth.Author page
Lead Project Manager
Lead Project Manager
21 April 2023Technical debt and unplanned work in software development.