As a software developer, I have been freelancing since 2010. Before that I was an employee for a consulting firm for 5 years. And one of the things that pushed me over the edge was when I found the invoice my employer had sent to the company I was consulting for at the time in the office printer. It said they “sold” me for 650€ per day, 13000€ or more per month. Given the fact that my net salary was 2500€ per month, and even if you factor in all the taxes and social charges and all the other benefits, that was still quite a huge gap. And in addition to that, I was not free to buy the car I wanted or the laptop I needed. When I needed vacation, I needed to factor in the “loss” for my employer. And when I wanted to attend a conference somewhere, I had to ask for permission. And I’m not even mentioning all the things I had to agree with (company pension plan, eco-cheques, etc.) that had simply no value whatsoever to me, but I was forced to take them because they were fiscally interesting for my employer.
For all those reasons, after talking with other freelancers to carefully evaluate the risks and constraints of having my own management company, it appeared obvious that it was the smart move given my experience. And the thing is I’m not the only one to make the same calculation. I know plenty of senior developers who have quit the rat race, stopped being an employee and taken matters into their own hands. Sure it’s a lot of administrative pain, with the accounting and all. Sure every letter you receive from the SPF Finance (tax services) makes a shiver run down your spine. Sure it’s stressful to have to find your own customers, deal with contracts, plan ahead for your periods of inactivity, negotiate your rate for each contract… but that is nothing compared to the incredible freedom you get. Being able to choose your customers and projects depending on how much you need to work. Being able to choose how you pay yourself, how you train yourself, the tools you work with. All of that is really satisfying.
That being said, when you are a freelance developer, there are 3 big kinds of customers in Belgium (and I guess in a lot of other areas):
- The big corporations, banks and public institutions (European Parliament and Commission) usually have framework contracts and Preferred Supplier Lists with big consulting consortiums and firms that force you to go through intermediaries who take a 15 to 30% cut on all your invoices, no matter how long the contract is, and often for very little added value other than access to those customers.
- The small companies are the most flexible and you can usually work with them directly, but they are the hardest ones to find and you have to negotiate a lot with them.
- And then there are the startups. When you are in the ecosystem, they are quite easy to find, you can also work without intermediaries, the projects are by far the most interesting ones, and you get to work in really cool teams. But that’s where the funding is often the most fragile (“no I can’t pay my bills with shares in your non-funded startup”)
Recently though, I noticed a really disturbing trend with startups refusing to work with freelancers, mainly for a few reasons:
- Most are afraid that a freelance developer will be less “involved” in the success of the company
- Some even fear that a freelance developer will combine several customers in parallel and thus will devote less energy to them than an employee, as if freelance meant part-time
- I recently heard companies being afraid that freelancers would have a harder time integrating into their team
- And I’m sure some really look at the cost and think a freelancer costs more than an employee
It’s hard to know where these fears come from, but let me bring some counter-arguments to those.
First of all, when you are a freelancer, your very ability to find work and the best work depends solely on your reputation. You can’t hide behind the reputation of a consulting company or the manipulation skills of your business manager. It’s just you and your awesome work. If you leave a customer on wrong terms, if your work is not impeccable, and if your involvement is not up to par with your customer’s expectation, no employment code, no firing cost, no prior notice is there to protect you. If you don’t show dedication, you will get fired, fast, and your reputation will suffer, making it harder for you to find a new mission in the future, especially in the startup world where everybody talks with everybody.
Second of all, most freelance developers I know hate switching between projects at the same time. It’s very inefficient and frustrating, so most of us prefer working for months or even years for one customer at a time.
As for integration time, it is of course completely the opposite: when you have to change project on a regular basis, you have to get comfortable finding your place very quickly in a new team. Practice makes perfect.
Last but not least, about the cost issue, most companies, especially the smallest ones for which economies of scale are really small, only consider the salary cost. They don’t factor in the management cost of dealing with social secretariat, car leasing companies, medical insurance companies, training companies, buying and maintaining your own hardware inventory and so on. In my experience, unless you are a big company and you can make big economies of scale on these management costs because you have a lot of employees, there is little to no difference in terms of cost between an employee and a freelancer. In addition to that, you also have to factor in the cost of firing an employee with a lot of seniority, or keeping him around despite your non-satisfaction with his work because of this cost.
But more importantly, I see plenty of companies neglecting the benefits of working with freelance developers.
- By definition, they have to manage their own company, find their own customers, negotiate their own contracts, so entrepreneurship is at the heart of everything they do. They understand what it means to manage a business, and they don’t expect to be told what to do: they take initiatives and think creatively.
- They come with an all-inclusive package: no need to worry about company cars, vacations, insurances, gear renewal costs or training. All of that is taken care of by the freelancer himself.
- If you are not happy with their work, or your budget constraints change, or simply your needs evolve, you can stop the contract very easily. Agreed, it’s the same on the freelancer’s side, so you’d better offer him the best working conditions possible to keep him around, but that shouldn’t be an issue, should it? ;-)
- Given the importance of their reputation and the desirability of their profile, most freelancers train on all the latest trends can bring some really cutting-edge tech to your company.
- A key asset for any freelancer is his professional network. So he knows a lot of developers, which can be incredibly powerful when you raise a new round of funding and need to grow your team quickly.
In addition to all those reasons, considering the fact that most experienced developers have already made the switch, if you don’t want to work with freelancers, you cut yourself from an important crowd of some of the best developers around. And don’t expect to bring freelancers back into an employee status: given how much it costs to kill a company in Belgium, and all the freedoms he would have to give up, I know very few freelancers who would come back to being an employee. It’s simply not worth it.
As a futurologist, I also feel the need to mention the fact that in my opinion, the employee status as a norm and default situation is fading away. More and more people are realizing that they need to adapt to a changing work environment at an ever accelerating rate. You need to train for new skills, acquire new knowledge. The very notion of career is being questioned and revisited more and more regularly. And in some industries, software development included, it’s not uncommon to work for companies anywhere in the world, from anywhere in the world. This trend is pushing more and more people to be independent workers, and even though governments and administrations are once again incredibly late in adapting to it, it doesn’t prevent us (even though it makes it incredibly painful sometimes) from doing it. It’ simply the sense of history, and it’s always frustrating to see so many awesome companies resist it, especially when they are supposed to be at the forefront of innovation.
Let’s talk about it
Given all that, I would love to hear more about the reasons why employers, and especially startup founders and managers don’t want to work with freelancers. I’m sure there are plenty of myths to be busted in there, and I’d be really happy to help. Also, if you are a freelance developer, and would like to share some interesting experience to share, let’s get the debate started in the comments of this post.