Why is it important?
When you are a startup, every decision you do influences the future of your business. Even such a choice as ‘whom to hire: freelancers or in-house developers?’ may be tricky and not quite as easy as it seems at first glance.
Some of you may ask:
- “What’s the difference if they are both working on a code?”,
- “Why even bother to distinguish them?”,
- “Does it matter with whom to work?”.
The answer is
- ‘yes, there is a difference between them’,
- ‘yes, it matters’,
- ‘yes, and you’d better think twice before hiring anyone’.
The truth is that different startups require different approaches. What may seem right for one company is just a waste of money and time for another.
Therefore, while choosing between a freelancer and an in-house developer, you have to clearly see how your company will benefit from either one or another option. You should define the key differences between these two types of employees and choose those criteria which are essential for your business.
On the freelance platforms, you can find a wide range of experts. They can be of different skill levels and come from different countries or specific time-zones. If you need a contractor who can do any type of job, you’d better hire a few freelancers, who’ll be a perfect match for each part of the project.
If you go with an in-house team, you’ll have to deal with the fact that one person cannot do all the jobs, even if your employee is a superhero in coding. Usually, the sphere of their expertise is narrow. So, if you suddenly need to switch to another type of work, you’ll have to invest in your team and educate them.
Probably, you’ve heard scary stories on how freelancers did not deliver the project on time, or did a poor job, or did not do it all. Well, this can happen while you hire them on the not-trustworthy platforms.
At Lemon.io, we work only with vetted developers, who successfully finish our registration procedure. They have to pass a coding test, an English test, a live interview with our talent acquisition team and even a call to previous employers.
Of every 100 developers who apply, only 4 make the cut and become a part of a team. However, not all platforms are so selective.
No doubt, when people are working together on the product every day, it’s easier for them to create a perfect bond and achieve great results. Developers know the strengths and weaknesses of every team member, which helps them to code in sync.
If you hire a freelancer you either have to pay a fixed price or hourly rates. The second option is more popular. Even if you choose to work with somebody from the US, it will still be cheaper than an in-house employee. However, there are even less expensive, but not less efficient alternatives on the market (for example, Eastern Europe or Asia).
They require more expenses. Sustaining an in-house team means paying taxes, office rent, and vacations. In addition, you have to provide your employees with the necessary equipment and social package, which includes insurance, sick-leaves, and other facilities like gym, game-room, language courses etc.
You can hire a specialist in the next couple days after you place your inquiry. On some platforms, you can have a contractor working on your project within a few hours. Of course, you have to pay accordingly.
Searching for a good developer may take months. But it’s not enough to just find a contractor. You still have to go through the onboarding process, which may take some time too. The development and growth of an in-house team is slow and gradual.
They do not have any working schedule, so they can work even on holidays and weekends if it is what you’ve agreed upon.
They work 6-8 hours per day and that’s it. If you have an urgent fix to make on Friday night, you’ll have to wait till Monday morning.
If you are working with confidential data, hiring a freelancer is risky, especially if you are doing it on the platforms with bad reviews. In this case, the security and privacy of the company may be at stake.
Usually, in-house employees sign a contract, which obliges them not to share any confidential information. This prevents the company from information leaking out and keeps it in safe hands.
They do not have any obligations to your company except for completing the task you’ve paid for. A freelancer will not try to make something extra of what you’ve asked about. So, if you are not a developer yourself, it’s unlikely you’ll be able to keep working only with freelancers in long-term perspective, especially if you want to grow and develop.
The in-house team will maintain the support and development of the product constantly. Except for the main tasks, they will fix bugs, review what has to be changed, upgrade the product, and optimize it.
When to hire a freelancer?
Taking the above criteria into account, here are some suggestions of when a freelancer matches perfectly for the startup.
If your company is located somewhere where it’s hard to find skilled labor force, freelancers may be the only solution. The same implies to the startups, where the whole team works remotely.
When you are at the beginning of your way, you might not even need to have an in-house team. At first, you’ll have to try to do everything on your own. If you face some difficulties, like fixing bugs or creating a new website, you can hire someone. But keeping an in-house team for this purpose is unnecessary.
Companies with the overheated specialists market
If your startup is located somewhere like San Francisco, where to hire a specialist costs a fortune, you should think about hiring a freelancer from Eastern Europe, for example as they are considered to be professionals. The quality of your work will stay the same, but your wallet will only profit.
Startups with inconsistent workflow
If your workflow depends on the season of the year with high and low periods, it is better to hire freelancers. The same applies to startups where you cannot predict the workflow. It is much cheaper and easier to function if you can hire more people when it’s needed and fewer people when the workflow is not that intense.
If you have an important client who plans to work with you for a year or so, you’d better go with freelancers. As you have a strict deadline, you need to be fast and professional. Freelancers will start working on the project right away, while in-house teams will spend weeks on preparations for working on the project.
When to hire an in-house developer?
In-house teams have their strengths. In some cases, they are not just preferable but obligatory.
Software development companies
There is a difference between completing a one-time project or doing some routine tasks and developing serious software. It can be related to the corporate security, accounting solutions, antivirus programs etc. This type of coding requires more congruous and patient job.
The team has to be dedicated to what they do, they have to be able to rely on each other and to know who is responsible for every step. These startups definitely will function better by having an in-house team of developers, guided by the CTO in this case.
Startups for sale
If the final goal of your startup is to be sold to a tech giant like Google, Microsoft or Apple, you’ll only benefit from having an in-house team. Big corporations do not want to deal with searching for the new specialist every time they need to fix something. If they buy the idea, they buy it all together, including all the prototypes and the team itself.
In-house devs are preferable to work with when security and privacy of the project are your number one concern. An agreement with the freelancer is never enough if you are working for the government. You have to make sure that confidentiality is the prerogative for you.
Companies with stable revenues
Regardless of the type of business you have, if your startup has already reached the point where the profit is stable and high, it's the right time to get an in-house team of developers. This is an investment into the future stable growth.
Companies with regular workload
If your business requires repeatable tasks and consistent workflow, you’d better hire in-house developers. After a while, they will be the best experts for you as they will know the specificity of your business perfectly. That will help them to improve the product constantly.
Whom to choose?
As you might have realized, trusting your business to someone is not an easy thing, especially when it comes to the sacred coding. Everyone who passed through the stage of the one-person startup to a company with an in-house team knows the pain.
However, you are the best recruiter for your company. You know exactly what you want to achieve, what you want to work on and in which direction to move.
Think of your goals, your specificity, consider what criteria are of high importance for your business and make your choice between freelancers and in-house developers. Don’t be guided by your ego, but think deliberately and wise.