May 2016

Sometimes the freelance model doesn’t cut it…

By: Odyssey Outsourcing
Tags: Freelance, Infrastructure, Security, Tax

Our Business development frequently receives calls comparing the freelance model to our hourly model. A lot of times these phone calls reveal accounting firms have been using freelance staff from freelance sites with success in roles such as virtual administration, IT support, IT coding, photography, website design, public relations, marketing, sales, and SEO.

However, when the same firms look to engage freelance accountants, this opens up a whole new series of questions, in terms of security, confidentiality, and cost versus quality.

Invariably the end result is a flight to quality, where security and confidentiality are backed up with multiple layers of comfort. These layers include physical, logical and legal layers. The last being especially important given Australia’s legislation in areas as well as professional obligations.

When you look at the freelance model, these are the following differences you’ll notice between a professional services company and the freelancer:

  • Security. Security isn’t too much of an issue when your freelance consists of small “one-off” jobs that don’t have confidential information. Once you start sending tax information or bank statements, then security is an issue. We’ve seen one example where a freelancer displayed a recent BAS/Financials from an online bookkeeping package as an example of her work. Quite concerning.
  • Voice. The ability to call someone who is in a professional environment becomes paramount when you are conducting business from a professional background. Roosters crowing, dogs barking, nearby building, or even just local noise in their house. It can make communicating complicated.
  • Infrastructure. By infrastructure we refer specifically to Internet and Electrical. We’ve already touched on the massive differences in internet broadband speeds between many Asian countries in our recent blog. In many cases freelancers work out of home environments that have particularly slow internet speeds. Loss of power is something to be considered as well as backup power such as generators.
  • Distributed workforce. With a freelance model being suited to smaller jobs, larger jobs usually involve a distributed freelance workforce. Solutions are needed for communication, feedback, meetings and cross training. Additionally you can expect that team/company culture will not be easily facilitated.
  • Tax and other obligations. We can probably guess a lot of freelancers aren’t paying their tax and other obligations. They should but they aren’t. Plus they should be paying the associated costs for the specific country they work from. Countries usually have contributions for items such as medical, pension, and unemployment.
  • The third party. Normally you are working with another party when you work with a freelancer. That may be a recruiting agency hiring the freelancer, or that may be a website. If using a website, you need to factor in their “fee”. Recently Freelance Giant Upwork Shakes Up Its Business Model by moving to a sliding scale starting in June. The fee will increase to the 20% for the smallest jobs.

Certainly the freelance model has been invaluable in allowing smaller businesses to have access to skilled freelancers. It will be interesting to see whether the freelance model can readily expand into more information sensitive roles in the future.