Agency · Freelancing

Why product companies are switching from outstaffing agencies back to freelancers?

Yuriy Dobrianskiy CEO | Tech consultant with ready offshore team.

February 4th, 2019

Few years ago I noticed that a lot of startups are moving from freelancers to agencies to avoid headache regarding instability of development process and management.

But now, more and more companies switching back to the freelance model.

If someone had such experience, could you please share your thoughts?

Thank you in advance!

Wally Barr Business Owner at Undrnu Management

February 7th, 2019

Both models have advantages and disadvantages. The agency model is suppose to be more stable and responsive. It is simply a B2B relationship. Most people considered freelancers as digital nomads who were not responsive and do not want to be held accountable. The freelancer of today is nothing like that. Successful freelancers are simply indy businesses. They are both professional and accountable. Good ones are very focused and avoid the "shiny object" syndrome. This along with the acceptance of the "Hollywood Approach" vs. the traditional "East Coast or New York approach" to completing projects is the reason you are seeing this trend reverse.

Kanwal Fatima Entreprenuer & Startup Consultant

February 4th, 2019

Because freelance model is more efficient as compared to staffing agencies. Freelance model provides the ability to attract talent from around the world. It is not limited by location.

Agency model is a third party model. Freelacing platforms allows companies to see the profile and past work of freelancers with reviews that clearly demonstrate the freelancer's ability. And I think hiring a freelancer is more cost efficient. Being a startup, when you've limited funds, freelancing is the optimal choice.

Dan Light Farther faster with Dan Light Consulting

February 9th, 2019

It eliminates the middle man and therefore reduces costs.

Andrii Morozevych CTO, Smartphone App Dev:

February 4th, 2019

The problem is that some agencies start outsourcing that type of projects to freelancers. Especially marketing. Plus quite often agencies put that type of businesses to low priority and startups need to wait a long time to get a response/actions from them. In the same, there is no right answer to the questions Freelance/Agency. There are a lot of great and terrible freelancers and agencies.

Steve Procter ... Venture Technologist Tech Entrepreneur seeks sales & referral partners for

Last updated on February 5th, 2019

Development is an iceberg. Above the waterline is the coder sitting at a screen and hacking code. Design, specifications, management, testing, etc, etc and a million other jobs are things that many not from a tech/consultancy world even know exist.

So if you have the skillset to spec out requirements, know how to assign to developers, manage them, etc (especially when it comes to saying what bits failed the testing and they need to redo), then freelancers are a good option - and ultimately you only pay for the coding bit as you do all the rest.

But if you do not have any development skills yourself or are not an experienced consultant with management experience then you might be better off with an agency who do all that other good stuff.

Paul Garcia marketing exec & business advisor

February 6th, 2019

My guess, and the best way to know would be to ask someone who has made the switch, not us, is that those motivated by the cost/risk elements of outsourcing find that if an agency is run poorly, they get no more benefit for somewhat higher cost than using freelancers. The idea to create a talent pool/agency seems easy, but those companies run into the same issues as the companies that have to sort through and manage freelancers. And if the agency can't attract enough customers, they're stuck with unproductive talent. Some outsourcing agencies have switched to more of a job board model where they're really only handling the administrative tasks, and not managing the individual talent, for similar reasons.

Dmitri Toubelis

Last updated on February 8th, 2019

One of the reasons is that more and more companies embrace remote work, i.e. they have permanent employees working 100% remotely. Supporting technology has matured and management issues all figured out. In that light, hiring freelancers makes total sense - it is safe way to build your team; you hire them on short term contract, see how they perform and then offer an incentive to stay for the long run.

I practice this approach for last 3-5 years and it works amazingly. We have people from all around the world on permanent arrangement and have no issues managing them.

When you deal with new technologies there is a learning curve involved and you want to keep people who is already up to speed on your stack for as long as possible to save time and money on onboarding. Long term employees are also carriers of your company culture and they play important role on passing this culture to new hires.

This is not the case with agencies. You are dealing with third party and when their contract is over their people are gone and you are back to the start line. Quite common situation with agencies is that once you depend on them they will start leveraging it against you, hiking prices, etc., which is never the case when you manage your employees yourself.

Bottom line is that agency model does not work very well for startups and many people started realising that lately.

Steve Procter ... Venture Technologist Tech Entrepreneur seeks sales & referral partners for

February 6th, 2019

as I said, if you don't have the development and management experience to look after freelancers yourself then an agency approach is best. However to take Paul's response into account, there is definitely an issue with sifting through the (far too many?) development agencies to find a good one.

And to work out which is a good agency you need to have some development and management/consultancy experience in the first place. Which takes you full circle into a sort of catch-22 scenario.

Which brings us right back to here - cofounders. technical cofounders. If your startup idea is tech-based then somebody sharing an equal place on the founding team must be technical. And they will then guide the business on freelancer vs agency.

Steve Procter ... Venture Technologist Tech Entrepreneur seeks sales & referral partners for

February 7th, 2019

Hi Wally, would you mind explaining this for us Brits? cheers

the "Hollywood Approach" vs. the traditional "East Coast or New York approach"