Although hiring full-time employees can be fraught with hidden costs and risks, there are three instances in which it can make sense:
  1. When you already own and pay for the cost of effective management of your full-time developers (likelihood: rare)
  2. When you must maintain specific security parameters that can only be achieved through direct employment (likelihood: rarer)
  3. When you have found someone incredibly interested in your business who is willing to work like an owner (likelihood: rarest)

Outside of these specific instances, the risks of hiring a full-time employee (FTE) may outweigh the rewards. There are hidden, but very real, costs in hiring an FTE — particularly when hiring for software engineering chops. 

Hidden cost: the apparent & opportunity costs of direct management

FTE’s require the cost of management, and most of our clients have better things to do than manage software engineers, such as selling, raising money, and growing their businesses. Internalizing the management of product engineering incurs a substantial opportunity cost that’s difficult to offset. It’s no secret that effective management can drastically improve the output of development teams, but consider the cost of investing in that infrastructure if you have yet to do so.

In our environment, we remove that burden from you by providing a lean management structure for each one of our projects (historically, the cost of the Gun.io managerial function has been less than 10% of the total project spend). We don’t believe in hiding our team members behind management personnel, either — in fact, you’re always able to communicate with team members working on your project whenever you choose, and we only leverage the skills of supporting, managerial talent when we’re certain they will increase the speed and efficiency of the team’s delivery.

Hidden cost: acquiring recruiting skill

Recruiting, hiring, and training FTEs is difficult.  If you decide to go the FTE route, prepare to invest the necessary time and effort into not only identifying, interviewing, and hiring good FTEs, but acquiring the skills to do so. 

On the other hand, if you’d prefer to spend your time on growing your business instead of parsing resumes and conducting interviews, then utilizing freelance talent may better suit your needs. We own the cost of sourcing, vetting, and ongoing evaluation among every single team member on every single project. Our community of 25,000+ freelancers, coupled with our on-boarding and off-boarding processes allow us to quickly ramp up or down your mix of talent — at no cost to you. 

Hidden cost: insuring against business continuity risk

Our freelance approach insures against business continuity risk. Simply put, if something unfortunate happens to your star engineer, your business is in trouble. Ditto for if something highly fortunate happens (e.g., your competitor offers her a 25% salary and equity increase — as is common in Silicon Valley's cutthroat talent market). 

With Gun.io, we own the risk of any single freelancer leaving suddenly by seamlessly transitioning another player directly from our bench community — again at no additional cost to you. 

We maintain stringent documentation standards that remain accessible by you and your staff at any time and even allow for predetermined, guaranteed availability during specific events and launch dates.

Indeed, no single FTE will approach the enterprise knowledge management practices that we have baked into our processes — because doing so would be "documenting themselves out of a job."

Hidden cost: retention packages for indespensible "unicorns" 

If any single employee becomes indespensible for the operation and growth of one's business, said business faces a tremendous risk. To retain this employee, her manager must often outlay large retention packages and provide additional concessions. The risk of a key employee leaving during an M&A transaction often can be an impediment to a successful transition as well. 

By working with an elastic team of freelancers, we help you save on this hidden cost.

Conclusion

A small percentage of software engineering needs demand an FTE-centric approach. But, for all others, freelancers are a better option. And nobody does freelancing like we do.

After having read our essay, whether you're intrigued or shaking your head in disagreement, we encourage you to get in touch. We'd love to hear your opinion. 

Use the button below, or email us directly at team@gun.io.

1.Stackoverflow.com  2.MIT.edu  3.DeltekInsight  4.BLS.gov  5.McKinsey.com