Quit and become a freelancer.
Line up a freelancing job elsewhere
Quit here
They might see freelancers as more flexible workforce. Easier to fire.
Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
71–80 of 96 posts
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#72Earlier quoted context omitted.
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.
Full-time employees do not pay those taxes and benefits themselves. It’s called a payroll tax because the company pays it for people on their payroll. If someone is paying those taxes themself they are not an employee, they are a contractor. This is one reason why contractor hourly rates are so much higher than salaried FTEs: They are paying higher taxes on the money that reaches their account.
Sorry, yes I meant contractors not employees. But employees are actually paying them also, it’s just the company pays it for the employ before the employee sees it.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#73From what I've seen and heard from others, budget shenanigans and office politics are both common reasons for hiring contractors/freelancers.
If it's September and your budget expires in April (new tax year here in UK), hire a few contractors to make sure you spend all that money. After all, you don't know what next year's budget will look like. And not using your budget might be taken as proof you don't need as much money next year. So hire contractors and do that project now, rather than waiting and taking the risk you can't do it all.
For even more budget shenanigans and org politics, imagine you're a product/project/whatever manager in charge of an exciting new project with a big budget. You do not control any of the dev teams. For some reason the dev leads are not excited by your new project and are reluctant to assign people to the project. They tell you it will be next year and you wonder if they mean never. Luckily, you have a big budget for the project! So you hire contractors and now your project has a dev team. The company doesn't have to keep on the temporary team and the project is delivered. Success!
This scenario kicks several massive cans of worms down the road. But for a while everyone's happy while progress is made on the project. Later the dev teams will be annoyed when they have to maintain code they didn't want in the first place. And whatever organisational problem meant the dev teams didn't want to get involved will still exist. But, by hiring contractors, everyone gets to ignore those problems for a while longer.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#74Earlier quoted context omitted.
> Freelancers are OpEx, FTEs are CapEx I don’t think this is true unless simply make up your own definition of CapEx. “Examples of OpEx include employee salaries, rent, utilities, and property taxes.” https://www.investopedia.com/ask/answers/112814/whats-differ... (Yes there are some times when you may be able to capitalize some labor, but that would apply to freelancers as well and is very much the exception, not th…
In Netherlands you can't simply fire a FTE. It's different from US where people have "at will" employment. In NL FTEs are more like CapEx than the OpEx
Are they more like CapEx or are they CapEx?
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#75Earlier 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.
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 an…
> it is that they can fire me at any point, without giving any reason or any notice.
Isn't this true for an US non-union employee?
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#76Earlier quoted context omitted.
I have heard this so many times indeed, and as a contractor myself, it is so tiresome. Taxes, pensions, insurance, reservations for sitting without a contract, courses etc etc etc. Those "30 Euro p hour" People actually easily cost around 100 for the company at least, and that is without factoring in sick leave, severance pay etc. Is there still a difference? yes, that is the risk contractors take. I agree that it ca…
> I have also seen one or two contractors effectively doing 80% of all the relevant work in a 15 man team. Major incident? Contractors in the warroom. Coming up with a new architecture? Contractors. etc. etc. I have also seen the opposite (as one of the contractors): the employees knew their system well, while the contractors were really missing all the intricacies of the architecture. It would take five years to lea…
Most definitely, like I also mentioned. Actually at my current gig there is one engineer in the networking who is basically the load bearing wall of the department. Internal, will never even think about going external (or ask for a raise even...).
One of my old managers always kept roughly 70-30 fixed/temp in his department, just for the scaling down quickly options, as well as occasionally pushing the contractors for the slightly shittier tasks every now and then.
I have had two 5-7 year streaks now as a contractor with a large institution, at which point something funny happens, the internals on large struggling projects tend to move on to greener pastures, and it comes to me and a couple of other externals to keep things moving and effectively trade some extra money for the lack of inspiration at work.
Lastly, sometimes, managers simply have a job which is a 200-300k a year job, but due to the HR policies, the position has a salary cap of e.g. 75k. Bringing in an external means they are able to spend more, and get more experience / higher quality people onboard.
In any case, the market is open, so anyone who thinks that the contractors are unfairly advantaged, either put in your resignation and go for it, or enjoy your stability but accept the deal you made. Corporate does not owe you anything, and certainly not rationality in what they do ;)
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#77Earlier quoted context omitted.
I get about 60K per year including a bonus, so that's an estimate. What I didn't factor in is vacation and sick leave. Vacation is 6 weeks. Sick leave, well it's the Netherlands so one could be sick for 2 years. If a freelancer would pay for an equivalent insurrance would cost about 500 euro's or a bit lower (so 6K per year). So to make it more equivalent, I'm assuming 2 weeks of being ill, 6 weeks of vacation, so 10…
60k sounds like a rather bad salary for a SW engineer in the Netherlands.
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Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#78When you have a full-time employee, from the perspective of the company you're entering into a contract where you have a fixed cost to buy fixed amount of hours per week of said employee work. To get the tasks completed efficiently is the employee manager's job (set goals, create an environment, give specs & etc...) When you hire a contractor/freelancer you can pay for output, not time. You can specify the work, spli…
> When you hire a contractor/freelancer you can pay for output, not time. This is not true, at least in my experience, and definitely in the Netherlands. You pay for time, not output.
That's why I said "may", not "will".
I hire a lot of contractors and if we can't specify the work sufficiently then we don't hire them. Or hire on a fixed budget to get the correct deliverables specified (if possible).
When you pay for "hours worked" the incentive is to "work more hours", not deliver the result. I've seen many employees spending their employers money for such "contracts", but they will not have done that with their own money.
When the task is so hard to define/specify/design, it's not a good fit for contractor's work.
BTW, the building industry has been working with contractors for ages and their practices are very efficient and the IT sector will learn from them sooner or later.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#79Because why would you pay more as long as you find people dumb enough to do it for little?
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Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#80There’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…
I'll add: often the freelancer is a former employee with expertise that's easier to pay for than train into new employees.