Hiring freelance staff on a ‘per-task’ basis could help SMEs save up to 70% on wage bills, according to research comparing employee costs.
The research, based on the latest report from the European Commission, showed that online marketplaces could provide significant savings to small businesses if they utilised specialist freelancers instead of hiring employees for some roles.
If businesses engaged freelancers for 37.5 hours a week (or one FTE equivalent), breaking down roles into their simplest tasks, they would save £19,500 per business per year.
Originally thought to be a blip in the economy and employment practices, freelancers on the PeoplePerHour (PPH) freelance platform have proved their increasing importance and durability by working with 42,000 UK-based employers (almost 60,000 globally) in 2016 alone. Employers have been provided with huge savings of almost 70% using freelance talent versus the costs they would have incurred working with employees in their country of residence.
In a study which involved comparing the mean cost of working with online and offline employees (freelance vs PAYE), PPH were able to calculate the approximate savings made by UK employers on an hourly basis (see notes of full methodology). Overheads including recruitment costs and the expense of providing facilities for employees were factored into PPH’s equation, to reveal the employer savings of 10 GBP per hour. This means businesses using the PeoplePerHour platform saved just over £90 million in 2016.
As well as the financial benefits to businesses, there are other key advantages to hiring freelancers. A full-time employee in a small company is often asked to fill multiple roles and work on a string of diverse tasks, many of which may not match the employee’s core competency. Externalising this work to freelancers allows businesses to unbundle these tasks and match them to a person with the perfectly matched skill set.
Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, comments: ‘Freelancers are an increasingly important part of the workforce and overall economy. Businesses are already tapping into freelance talent to accelerate growth whilst keeping overheads low, making sure their budget goes further whilst making other efficiency gains in matching the right talent with the right tasks.’
‘According to our calculations, if all SMEs transitioned 37.5 hours per week to specialist freelance talent, the UK-wide savings would be £26bn, an undeniably large sum that businesses could invest into other areas, and much-needed in times when money is still tight for SMEs.’
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