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Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

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Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#31

Post by Aurornis »

zwnow wrote: post #22
brookst wrote: post #14

Earlier quoted context omitted.

That last is especially important.. it is option value. Same reason a one month lease costs more than a one year lease.

When times get tough they shouldnt hire freelancers in the first place... If they have ongoing hires they pay 3 times as much on a freelancer as they do on an employee... this logic doesn't check out at all

No, the logic is right.

If you have full-time employees you have to fire them when times get tough. In some countries it’s very hard to fire people and it requires months of notice. These laws encourage companies to choose contractors so they don’t get stuck with employees they can’t fire during tough times.

If you have freelancers you can more flexibly pause, delay, or reduce hours and then resume them again when you need them.

You can also scale freelancers to your workload or ability. With each FTE you’re committing to an extra 40 hours of pay every single week, no exceptions. With a freelancer you could have them do 5 hours one week, 0 hours the next, 40 hours after that. Even at 3-5X the rate it could come out to be less costly if the workload is intermittent.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#32

Post by Aurornis »

drob518 wrote: post #25

If you’re upset, quit and become a freelancer. You’ll figure it out pretty quickly, I suspect. As a general life rule, if it ever seems like somebody else is doing better than you, instead of bitching about it, do what they are doing.

Note that the freelancers who come through agencies have their own employment arrangements with the agencies. They aren’t getting 100% of that pay. With some agencies they may only be getting 3/4 or as little as 1/4 of it.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#33

Post by drob518 »

andix wrote: post #30
drob518 wrote: post #25

If you’re upset, quit and become a freelancer. You’ll figure it out pretty quickly, I suspect. As a general life rule, if it ever seems like somebody else is doing better than you, instead of bitching about it, do what they are doing.

I fully agree with that statement. But keep in mind that the grass is always greener on the other side. Freelancing has it's own challenges. Especially in economically uncertain times, freelancers are the first ones who lose their jobs, if the company needs to save money.

Yep, that’s exactly my point. There are very few free lunches in the world. Sometimes, you’ll find one, but typically you’ll just find a trade off, with some segment of the population valuing something more than the rest of the population. In this case freedom to choose jobs vs job security in a downturn.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#34

Post by drob518 »

Aurornis wrote: post #32
drob518 wrote: post #25

If you’re upset, quit and become a freelancer. You’ll figure it out pretty quickly, I suspect. As a general life rule, if it ever seems like somebody else is doing better than you, instead of bitching about it, do what they are doing.

Note that the freelancers who come through agencies have their own employment arrangements with the agencies. They aren’t getting 100% of that pay. With some agencies they may only be getting 3/4 or as little as 1/4 of it.

Yep, that too.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#35

Post by ksec »

Any big companies or organisation ends up alike with bureaucracy. It is the same thing with Government.

They are happy to pay 2 -3 times the wages to external or contractors / non civil or public servant parties. But they cant pay the fare wage for the same job within the government.

For those who have problems with Cvivl servant or government, it really isn't their fault. They are not incentives to do anything beyond their pay. And they are not well paid. Especially those in UK.

Ultimately it is because firing / letting go of freelancer is far easier than higher wages or additional headcount. Which come with its own set of political battle within the system.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#36

Post by TheDong »

Other people have already answered about budgeting reasons, but there's also other possible reasons.

Regardless how good you are at coding, if your personality doesn't mesh with your manager, if other people think you're an asshole, well, management would rather someone who knows how to talk pretty and sugar-coat things but can only code okay over someone who's an asshole and confronts them, but is a superstar coder.

I obviously can't really know, I don't know you, but the fact that you're getting "frustrated and confused" over this, your boss isn't trying to placate you, and you use hacker news really makes it sound like you're not super mature, and not exactly a people person.

I don't actually know your situation, but from how you write it's at least possible soft-skills are a factor.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#37

Post by akudha »

brookst wrote: post #14
curious_curios wrote: post #2

There’s a whole world of unintuitive reasons for this kind of thing. Non-exhaustive list: - Freelancers are OpEx, FTEs are CapEx. They are usually separate budgets so departments split. - They want to maintain good relationships with the freelance companies in case they need to spin up staffing quickly with top talent in the future. - They don’t have to pay some benefits and taxes on freelancers. - Freelancers and co…

That last is especially important.. it is option value. Same reason a one month lease costs more than a one year lease.

I work as a contractor and am managing a small team. I easily do the work at least two people in my team, in addition to managing ("babysitting") the team. While my pay is not 5 times their pay, it is most certainly higher than theirs.

But my most attractive trait is not that I work harder, it is that they can fire me at any point, without giving any reason or any notice. On top of it, they don't have to deal with any personnel issues - if I misbehave, they'd just fire me on the spot or complain to the agency and let me be their problem. No matter how hard I work, I rarely get a word of appreciation. They also don't have to do performance reviews, "rankings", pay discussions etc. Yes, it all comes at a higher cost, but it also removes all the pesky things that nobody wants to deal with.

Think of it like hiring a plumber even though the plumbing issue is small enough for you to fix yourself. You just don't want to do it

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#38

Post by lylejantzi3rd »

curious_curios wrote: post #2

There’s a whole world of unintuitive reasons for this kind of thing. Non-exhaustive list: - Freelancers are OpEx, FTEs are CapEx. They are usually separate budgets so departments split. - They want to maintain good relationships with the freelance companies in case they need to spin up staffing quickly with top talent in the future. - They don’t have to pay some benefits and taxes on freelancers. - Freelancers and co…

A few more...

- They sometimes provide specialized skills the company has difficulty hiring for.

- They sometimes provide specialized skills that the company only needs for a short period of time. The goto example here is audio programming on a video game.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#39

Post by drob518 »

Aurornis wrote: post #28
curious_curios wrote: post #2

There’s a whole world of unintuitive reasons for this kind of thing. Non-exhaustive list: - Freelancers are OpEx, FTEs are CapEx. They are usually separate budgets so departments split. - They want to maintain good relationships with the freelance companies in case they need to spin up staffing quickly with top talent in the future. - They don’t have to pay some benefits and taxes on freelancers. - Freelancers and co…

> - They don’t have to pay some benefits and taxes on freelancers. The employer-paid taxes and benefits on full time employees can be very large, depending on the country. Even in the United States people are surprised to learn that their employers pay taxes for employing them. You pay some taxes on your income and your employer also pays some taxes for employing you!

Well, and the employees often have to pay those taxes and benefits themselves, so that’s rolled into the amount the company needs to pay them.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#40

Post by cjbgkagh »

curious_curios wrote: post #2

There’s a whole world of unintuitive reasons for this kind of thing. Non-exhaustive list: - Freelancers are OpEx, FTEs are CapEx. They are usually separate budgets so departments split. - They want to maintain good relationships with the freelance companies in case they need to spin up staffing quickly with top talent in the future. - They don’t have to pay some benefits and taxes on freelancers. - Freelancers and co…

Easy to fire so they can be relied upon to toe the line. Outside the org chain so little risk of becoming a competitor to management. Additionally freelancer orgs are often a vector for mutual back scratching / kickbacks.

I think FTEs are often promised security, a career with promotions, a work family etc. These are expected out of a tradition of norms. Belief in such promises can be exploited to extract more value for less.

Management optimizing for self interest will exploit FTEs as much as they will allow and divert as much revenue to peer owned freelancers as the company will allow.

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