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Using freelancers can be a great way to boost your business performance, but you should always consider several things before hiring a freelancer, especially if you are working with an offshore team. Many companies have experienced horror stories when working with freelance teams, while the great majority have had long-term success. The main takeaway is to understand how to analyze freelancers based on your unique needs and select the platform that is best for your needs. In order to help you understand the importance of this, here is a case study to put things into perspective.
When one FinTech startup needed a freelance team, they used a company called UpWork to place a job listing. Several low cost offshore developers applied and two were hired to complete the project. The first developer, based in Chandigarh, was dishonest about the timeline and delayed the project two weeks by not starting. When they did finally finish, the code did not work and when threatened to terminate the working agreement, the freelancer deleted all the files on the server.
The second freelancer, based in Moscow, billed for over 10 hours of work and later closed the contract without delivering anything. This article is designed to help you avoid these freelance scams by considering all the factors to hire a professional freelance team that will get your project done on time and within your budget to avoid horror stories like these.
1. Perform your due diligence on the freelance platform.
There are many freelance options available online and locally, and encourage you to analyze each one to find one that best suits your needs. In some cases, hiring an on-site freelancer may be a better option. Posting a simple ad on Craigslist can yield a great pool of local candidates ready to show up at your office within as little as 12 hours.
If you are looking for a longer-term local contractor, hiring sites like Indeed have a contract category where local consultants will send you a resume to conduct an on-site interview. Other platforms will pre-screen candidates to select the best freelancers. Toptal does this but is restricted to programming and the workers may still be remote.
It is important to fully analyze the benefits and costs of each platform before selecting from their candidate pool.
2. Make your requirements clear through preparation.
When you are working with any contractor, they are likely billing you on an hourly basis. Any questions or research that they need to perform may cost upwards of $200 per hour. If they make mistakes in the work delivered, it is highly likely that it could be avoided had the requirements been clearer. If you are building a software and hiring a development team, this may mean preparing functional specifications or a plan that outlines the IT related goals of your business.
3. Understand that quality does not come cheap
Unless you are developing a basic website and using good WordPress templates, it is likely that you will need to hire someone who is qualified to build a quality website or fulfill the other contract requirements. With the basic law of supply and demand, you can imagine that a limited pool of talented freelancers does not come cheap. On the website, Upwork.com, many freelancers advertise rates as low as $10 per hour. The average consulting rate for a premium contract is often at least $50 per hour, begging the question why the difference is so low.
The first reason is that many of these ‘low budget’ freelancers are actually charging much higher rates, billing-in hours that are in far excess of the amount it actually takes them. The second reason is that their portfolio and expertise is not high enough to demand the same rates as more qualified contractors. Therefore, be skeptical of low priced freelancers and the websites that allow them to join.
4. They may not understand your project as well as an in-house team.
While seemingly obvious, this realization can be harsh for a company that is working with freelancers for the first time. They may not calculate the impact of a learning curve when hiring an outside team. Because the individual is likely to be working with several other companies, they will necessarily know less about each company than a full-time staff member on payroll.
This is not always an inhibitor to progress, but the magnitude of its impact may be underestimated if a company is not used to working with outside groups. This is especially the case where managers are not familiar with working on projects with people and having to slow the project down to explain information that would otherwise be known.
5. You should take care of all legal due diligence up-front.
Regardless of how you hire freelancers and what standard agreements are in place, it is always a good idea to ensure that you receive all proper documentation. This means acquiring a W-9 form from each freelancer for whom one is required by the IRS, confidentiality agreement, and transfer of ownership of any works that they produce. Otherwise, you could get in trouble with the IRS when it comes time to send 1099-MISC forms to contractors at the end of the tax year. These cases have happened many times and it has not always ended well for the companies that lacked enough prudence to perform the due diligence before the work was initiated.