5 Reasons Manufacturers Should Use Freelancers for Skilled Labor Help
One of the major changes in employment since the beginning of the 21st century has been the transformation of the workforce from mainly full-time to increasingly part-time and freelance. Some of this has had to do with individual company dynamics (mergers, restructuring, and so on) while a lot of it has also had to do with nationwide economic earthquakes, such as the bursting of the tech bubble and the prolonged effects of the Great Recession. The need for skilled workers like engineers hasn’t gone away, but companies have had to be more budget-conscious about hiring. If your company has found it now has a skilled labor gap and needs to hire someone to fill it, a freelance engineer may be your best choice instead of hiring permanent in-house staff. Not only are there employment and skill benefits, but there are immediate financial benefits as well.
One of the benefits you’ll see if you hire a freelance industrial engineer is that you’ll no longer have to deal with most tax paperwork for them. You won’t have to have them fill out hiring paperwork and issue W-2s, though you’ll still have to have them fill out a W-9 and then issue them a 1099-MISC for the work they did over the course of the year. Payroll taxes for that worker won’t be your concern anymore, either.
One trade-off you’ll have to be prepared for is that, since you won’t be taking care of their payroll taxes — those will fall to the freelancer to pay — an independently contracted engineer is going to require a higher pay rate than a permanent employee, especially if you aren’t going to cover other benefits like health insurance and retirement fund matching. It’s usually best to either move some of the money you would have spent on benefits over to the freelancer’s pay rate to compensate for the loss of benefits, or to offer the freelancer temporary benefits that may be more basic than what you offer full-time permanent employees. For example, offer health, vision, and dental to everyone including contractors, but offer things like retirement fund matching, education reimbursement, and legal insurance coverage to only permanent employees.
Additional Insurance Coverage Benefits
Speaking of insurance, your costs for liability, unemployment, and other work-related insurance coverage will fall if you have fewer permanent employees. Hiring an industrial freelancer generally helps you avoid increases in your premiums because this person is not going to require unemployment compensation at the end of the contracted project, for example. These are costs you often don’t have to compensate for when negotiating the freelancer’s pay rate for the project, which saves you money. However, if contractors have extra costs related to a liability policy that they themselves carry for their work, they are going to (understandably) want more pay to cover their overhead.
Even the busiest companies have their downtimes, and it’s at these times that working with freelance engineers instead of hiring permanent staff can really help you out. If you have a period where there are no projects that need work, a permanent employee is still going to have to be paid and receive benefits, unless you furlough the employee, which will only make employee morale drop. However, if you work with freelancers, you don’t have to keep them on during periods when there is no work; just contact them again when new projects arrive.
Even if you are trying to cover a gap left by a permanent employee who quit or retired, take a look at how much the person was actually working. If there were noticeable gaps where there was simply no work, switching that role to one filled by a freelancer could be very beneficial. It also helps you get someone into that role more quickly. Full-time permanent employees can take a while to find; PMG notes that it can take around 25 days to find the right employees if you’re trying to hire permanently and locally. But with freelancers, you can find one in a much shorter time, and it’s easier to find someone who is set up to do the work remotely. PMG discussed the case of one company that needed 60 freelancers and noted that it was difficult to find that number of freelancers in the local area; had the company looked at hiring freelancers, especially those associated with staffing agencies or contractor broker platforms, it likely would have been able to fulfil its needs more quickly.
Desire to Work
One advantage of working with contract engineers is that these engineers want to work. The don’t just want to work in general to get a paycheck; they are choosing to work at that time and on a project they find interesting. Permanent employees will work on whatever projects you give them, but they may see tasks as requirements rather than subjects they really want to delve into. The contractors may show more enthusiasm because this is a project to which they’ve consciously decided to allocate their time. This is not to say that your permanent employees wouldn’t be happy to work on the project, but they would be working on it mainly because that was their job, whether the project interested them or not.
Also, a consideration is the dearth of people willing to take on industrial engineering and manufacturing as a full-time, permanent profession. One on hand, the baby boomers who were working on many of your projects are now retiring; on the other hand, millennials aren’t being attracted to the manufacturing and industrial sectors in large numbers. This has left a manufacturing skills gap that has been hard to close even though Gen-Xers are still working furiously. You could hire more people and offer on-the-job training, but they could end up leaving a few years later, which means all the time you spent training them would no longer benefit your company. Working with freelancers who are already skilled in what you need can save you time and aggravation. These are experts in their fields who, other than the usual short adjustment time that comes with working with any new client, will be contributing value almost immediately.
Even more crucial is the fact that those people entering the manufacturing and industrial workforces now are well aware that business changes, such as mergers, can eliminate permanent jobs quickly. These workers may prefer to be independent contractors as that allows them the freedom to go where they see fit, rather than staying with one company that may end up cutting their position anyway. So the pool of freelancers is only going to grow.
Technology is constantly changing — that’s why so many workers have to keep taking classes and learning new programs. Contractors, though, know that their business relies on being skilled in the latest programs and with the latest equipment. If you have a project coming up that needs someone who knows how to use a certain piece of equipment or work with a certain software program, you can contact freelancers who advertise that they have this skill and have them start working relatively quickly. If you restrict yourself to hiring permanent employees only, you could find that up to 10 percent of the people you try to hire aren’t actually skilled enough to meet job requirements, no matter what their resumes say. And even if you decided to take a chance on that person, or to train another engineer already working for your company, it could take up to a year for that person to become fully knowledgeable in the equipment or software. That would affect how quickly your project could be finished.
Another issue is that permanent employees tend to leave. While many may stay for a few years, your company is likely to have turnover each year as employees search out new opportunities and promotions. A contractor is likely to still be contracting a few years down the road because they want to stay independent. And if the worst happens — your favorite contractor decides to stop working or can’t take one of your projects — he or she may be able to refer you to a colleague who has the necessary skills to complete the project. Working with industrial freelancers can eliminate the manufacturing skills gap and other holes in company knowledge rather quickly.
As the contingent or gig economy has grown, so has the number of available freelancers. Whether you advertise to and contract with them directly, go through a staffing company, or go through a freelance broker site, you’ll find that freelancers are often the perfect solution to staffing issues.