‘Try before you buy’ Ideology pushes companies to hire freelancers. - Courtesy of pixabay/1941059
CAIRO – 17 July 2018: With rising numbers of freelancers in Egypt, freelancing websites have become even more popular due to their ability to connect freelancers with companies and their ability to guarantee that the client will pay the freelancer the agreed amount after the completion of the task or project. However, freelancing websites do this for free. While, wesbites, for example FreelanceME, does not take registration costs from companies or freelancers, they often charge freelancers between 5 percent and 20 percent of their income. Upwork, for example, charges freelancers 5-20 percent depending on a freelancer’s collective billing with every client.
When it comes to legalities of freelancing and paying taxes, a lot of freelancers in Egypt are either unaware of the laws governing them or unwilling to learn them to avoid paying taxes and reporting their income. Speaking to Egyptian lawyer Abdallah Ahmed, it becomes clear that freelancers and companies need to report their business and pay taxes accordingly, if their income is above a specific threshold. “On a freelancer’s ID, they need to register as s freelancing professional. If a freelancer is an engineer then they write freelancing engineer, and so on; they do this by registering using their certificate and their syndicate information. They then need to pay taxes and report their activity,” explains Ahmed.
When it comes to banks, there are difficulties to do with producing credit cards and debit cards, explains Ahmed; however, if a freelancer provides the invoices from clients instead of their salary certificate, the should be able to issue them one. As for companies that hire freelancers, they are required to register their freelancers and report them; according to their salary, they then need to pay taxes.
Freedom in hiring
Freelancing offers less responsibility and commitment on the employer’s part, offering them more flexibility than hiring full-timers and less cost. Not only can they solve the issue of seasonal demands, but freelancers also allow the employer the freedom of a hassle-free termination of services, as well trying out the candidate on the job before deciding to fill in full-time positions opening up. Freelancers also give the employer the advantage of a diverse pool of talent, skills and expertise, without the added cost of hiring them all.
“Hiring a freelancer is akin to screening all possible future employees for a period of time, without any of the commitment; no contract, taxes, insurance,” explains Mohamed Hassan, general manager at a translation and transcription firm. Sometimes a prospective employee seems perfect on paper, then they start working and it turns out they’re not as good as expected, adds Hassan.
“Freelancing gives us the opportunity to try multiple candidates out and ensure that we do not just pick someone who is good on paper, but also on the job.”
Having been with the company for six years, Hassan has known first hand that years of experience doesn’t necessarily translate into a good fit with the company’s work culture and system, Hassan explains. “Once, I hired a young lady who was great, but she had been working at this other company for years and was used to their work schedule. She was not able to adapt to our work style. She quit after two months,” he recounts. “I think for both sides, it would have been better had we tried her out first before she quit her other job. That way, we would have known if she fits in or not.”
Trying out several employees on the job before making a hire is handy, but another key reason is that the need for employees often fluctuates based on the supply and demand needs of the industry. “A company should resort to freelancers when there is demand that is either not high enough or steady enough to hire full-time employees,” says Laila Awad, a senior operations executive. The company would incur fewer costs and consequently more profits by relying on freelancers for one-off jobs and seasonal demand, she adds, and so in some cases, contractors are more cost efficient.
Nader Mina, a human resources officer at a multinational marketing company, explains that freelancers are often hired to reduce administrative costs and to ensure less financial liability on the company. “If there is no contract, then the company does not have to pay taxes or social insurance, and most freelancers, if not all, do not have contracts. After all, giving them contracts would defeat the whole point of hiring them,” explains Mina. Many companies, however, especially the more established ones, do require freelance contracts to keep their legal books in check and ensure that both parties abide by specific contractual terms.
Looking at industries that rely most on freelancers, it becomes clear that freelancers that focus on Information Technology (IT), translating, editing, social media, accounting, voice over, graphic design and the arts in general are sought after the most, according to platforms such as Freelancer, FreelanceMe, Mostaqqel, Upwork and PeoplePerHour. Similarly, Payoneer Blog’s research suggests that seven industries rely on freelancers the most, namely: IT and programming, design and photography, writing and content, engineering and science, marketing and sales, finance and management, and legal.
Of these seven industries, Payoneer Blog suggests that the more niche a freelancer’s specialty is, the more popular and needed they will be; this builds on the idea that it is more cost-effective to bring in freelancers for rare specialties than to have a full-time staffer that is not always needed. “The more specific your niche, the more business you will get. It seems counterintuitive to only focus on a particular industry or skillset, but you’ll quickly beef up your experience, which will make you all the more appealing to potential clients. Being known as the go-to freelancer in your industry means more referrals and more business,” writes Payoneer Blog’s Susan Guillory.
Although freelancers are good for a company because they diversify the kinds of tasks a company can do and increase expertise, the flexibility of contracting freelancers doesn’t come without a cost, often meaning instability, lack of skill development, and less adaptation to the company’s system.
“A freelancer’s relationship with a company, from my experience, is relatively more casual than that of formal part-time or full-time employees,” says Mina. He attributes this casual relationship to two main factors: the lack of a contract, and the multitude of projects that a freelancer takes on with different companies, meaning that he or she often makes the company follow their style, and not the other way round.