The cost difference between hiring full-time and freelance software developers

22nd Jul 2019
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The gig economy has grown leaps and bounds with most people across globe preferring to sit at their home and work as per convenience. Most employers have also started preferring freelancers over full-time employed, because this helps them in cutting extra costs incurred by them, which included insurance, perks, transport facility, meals and much more.

There is a huge demand of freelance work now, and in each field numerous people are seen waiting to grab an opportunity, where they can work from their home and don’t have to report to anyone.



freelancer vs hourly basis



Stability is affected in freelance work, although, the same work can be assigned to another person, but it becomes time consuming to train the new employee.

There are pros and cons to both kinds of hiring. From costs to quality and risk reduction, there are a number of factors that make freelancing a better way of hiring employees.


Let’s look at the pros:


  • Access – There is no dearth of talent in the market. Skilled personnel are waiting for good opportunities to come their way. From IT professionals, to marketers, accountants and entertainers, everyone with all kinds of portfolios are available. Once you come across a suitable candidate, you are good to start with the work and assigning.
  • Reduced risk – The employer is at low risk in the case of freelancers as they are not liable to give them any benefits like the health insurance or medical insurance. In case of emergencies, the employees do not turn up to the employers as they are not the full-time working people in the organisation.
  • Cost –The office supply costs can be avoided by cutting down on the cost of full-time employee, and rather opting for people who work on hourly basis or freelancers. Other benefits that the full-time employees enjoy, like health insurance and other things, can also be ignored in the case of freelancers.
  • Payroll limiting – The headcount of most companies is meant to be low citing legislative measures. A cap is applied on the number of employees, hence, it is always preferred to hire a freelancers and full-time developer in equal numbers


Now let’s throw some light on the cons:

Freelancer vs full time


  • Back up – The freelancers might not always be available, and sometimes even take a day off from work without prior information. To cope up with a situation like this, the company should eagerly start looking for other freelancers, who can be used as back up. Timings and work should be decided prior signing the contract. A freelancer is a multi-tasker, who can take up numerous projects at the same time. You must decide upon a time and tell the employee about it. Always remember, the employee will follow your timings.
  • Building relationship – the freelancers are not inbound, and hardly meet the employers. Therefore, their relationship is not as good as the relationship an employer shared with a full-time employee. This might not only affect the work, but might also lead to irregularities from the freelancer’s side.
  • Commitment – The full-time employees are attached to the company’s success and feel a sense of pride when the organisation performs well and flourishes. Whereas, a freelancer’s interest is not in the success of the firm, but their sole interest lies in their work and their personal performance.
  • Monitoring – Companies invest a huge deal of time on the training and supervision of their employees. The training done on the full-time employees is beneficial in the long run, but investing the same amount of time on a freelancer, might be for a short-term as you cannot monitor them because of their odd work timings.


Software developers are an integral part of all organisations who come to rescue each time you call for them. With everything becoming online, a plethora of software are being installed on the computer systems of the employees. They are the go-to help everyone looks for in an organisation. It is extremely important to classify the cost incurred on a full-time software developer and a freelancer.


Also Read : How much does it cost to hire full time vs hourly basis mobile app developer


Let’s take a few points to consider before hiring:

Few points to consider before hiring full time vs hourly basis



  • Comparing the salaries – Most of the time the salaries of the two are compared on an annual basis. The full-time employees get a fixed salary, but a freelancer might earn on hourly basis or according to the number of days spent working on a project. Considering how much either would cost to the company annually, an employer must make decision accordingly. Most freelancers have a short-term engagement, who come onboard for a particular project and leave after the project comes to an end, whereas there any many who get associated with a company for longer periods of time. Hence, it is important to figure out how much they are going to cost annually.
  • Paid benefits by the company – Full-time employees are entitled to a number of benefits by a company including the health and life insurances, free lunch at office, workspace maintenance, paid leaves, retirements and savings, annual bonuses, payment for overtime, training tax, unemployment insurance and much more. Won the other hand, freelancers do not receive all these benefits and the cost incurred on them is lesser than the full-time employees when it comes to these factors.
  • Indirect costs incurred by the company – The costs that are incurred on the basis of the day-to-day activities of the organisation are termed as indirect costs. Some indirect costs are listed below –
  1.  Office equipment
  2. Cleaning supplies
  3. Computers
  • Cost comparison –The total cost including the overall expenditure on the two must be calculated. Although, it is a good practice to compare the annual salaries of the two, it is also important to include the benefits and other perks received by the employees.
  • Short-term projects – an employer must decide upon hiring a full-time or hourly-based employee, depending on the time that will be spent on a project. If a project doesn’t need much time and will be completed within a given time frame, the employer must go for a freelancer, as the cost incurred on them will be lesser than a full-time employee. Most start-ups consider hiring freelancers initially as it is beneficial for them during the first few years of setting their business.
  •  Ways of paying the freelancers – There are many things to be considered before hiring freelancers. After verifying the nature of a project, a freelancer should be paid either on daily basis, or hourly, there is another option of paying them by the project. If they are hired only for a project, then it is important to discuss the payment way and hire them for the entire project.
  •  Flexibility – There is a flexibility is hiring freelancers. If a full-time employee is under performing, he or she has to be kept in the organisation. On the other hand, projects can be stopped giving to the freelancers who are not performing well.


Conclusion – It is important to figure out the nature of work and the timings that you want to hire a software developer for. If the project is short-term and one-time inputs are require, you might as well want to opt for a freelancer, whereas, if you think you need a professional for updates and the queries that might arise in the future, you should hire a full-time employee.

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Authors
Octal IT Solution
Arun Goyal is Founder at Octal IT Solution. Technology innovation and trends insight come easy to Arun with his thorough knowledge in the domain. A leader in his own rights, his grad-friends see him as an avid researcher and a technology evangelist. See him talking about ideas, trends and technology as a part-time author.

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