5 Downsides of Using Platforms like Toptal, Upwork, and Fiverr

Screenshot 2024 02 02 at 12.01.31

In our age of the interconnected, digitalized world, we are not bound to traditional employment practices – we have way more options than before. One obvious path to finding necessary specialists is freelancing. With the rise of platforms like Toptal, Upwork, or Fiverr, you can easily find freelance designers, data analysts, or web developers who will do the work. Most likely, you will get your scope completed faster and cheaper than if you decide to resort to in-house hiring. 

However, there is a catch. It makes sense to involve freelancers, however good and professional they are, only on a short-term basis for occasional initiatives or tasks. For example, if you decide to release a video ad for your tech company’s anniversary, you can hire a freelance video maker for this one-time gig. However, we strongly advise against onboarding developers on a freelance basis for tech companies, and here are the main reasons why we think that way.  

Table of Content

Concern #1: Reliability Concerns

The inherent nature of a freelance career introduces a level of variability in both the quality of the work delivered and the commitment levels of freelancers. Despite rigorous selection processes on some platforms, predicting a freelancer’s reliability based solely on their profile and past reviews can be a gamble. I’ve seen projects where the deliverables exceeded expectations, but equally, I’ve faced situations where the work was subpar, or deadlines were missed. This inconsistency can significantly impact project timelines and overall quality.

In a full-time employment setting, accountability mechanisms are typically stronger and more straightforward to enforce. In contrast, on freelance platforms, while there are systems in place to manage disputes and ensure accountability, the process can take time and effort. There also can be instances where freelancers can disappear mid-project or deliver incomplete work, leaving the team in a difficult position to find a replacement quickly or to redo the work, often under tight deadlines.

It would be unfair to label all freelancers as unreliable and irresponsible – there are truly professional specialists who deliver high-quality work even on a freelancing basis. However, freelance work in its nature implies fewer ties to the project and a lower level of responsibility for the final result, which increases the risks of the project going off planned tracks. 

Concern #2: Lack of Long-Term Perspectives

knowledge retention 2

Freelancers, by the nature of their work, typically operate with a project-to-project mindset. This focus on short-term engagements can lead to challenges in building a sustained relationship or in cultivating a deep understanding and alignment with a company’s long-term goals and strategies. For projects requiring ongoing development, iterative improvements, or long-term maintenance, this transient approach can be a significant drawback.

The transient freelance business can also affect team cohesion and the continuity of knowledge within a project. When freelancers move on to their next project, they take with them the in-depth knowledge and understanding of the work they’ve contributed. This can create gaps in the team’s collective knowledge, making it harder to maintain or build upon previous work without a comprehensive handover process, which itself can be hard to manage effectively.

Therefore, tech companies do themselves a disservice when choosing to cooperate with freelance developers or other essential specialists. While you might see the immediate scope completed even on a high level, you will lose from the long-term perspective, as the process of knowledge retention and continuity will be lost.

Concern #3: Integration with an In-House Team

One of the first hurdles in integrating freelancers with an in-house team involves bridging the gap between differing work cultures and operational practices. Freelancers, accustomed to a high degree of autonomy and varying work schedules, may find it challenging to adapt to the structured processes and collaborative culture of an in-house team. Conversely, permanent employees may be wary of freelancers, viewing them as temporary solutions or even as competition, which can lead to resistance or lack of cooperation.

Effective communication is the cornerstone of successful project management, yet integrating freelancers into existing communication channels often proves complex. Differences in work approaches, preferred communication tools, and work habits can lead to delays and misunderstandings. Ensuring that freelancers are adequately briefed and integrated into team meetings, email chains, and project management tools is crucial but not always straightforward.

At the same time, the temporary nature of freelance engagements poses significant challenges to knowledge sharing and project continuity. Freelancers might not be available for the entire duration of a project or for future iterations, leading to gaps in knowledge and expertise when they depart. Creating comprehensive documentation and ensuring that in-house team members are closely involved in all aspects of the project can help mitigate these risks, but it requires additional effort that might not pay off eventually.

Concern #4: Legal Complexity

At the heart of any freelance engagement lies a contract, intended to safeguard the interests of both parties. Yet, the reality is often a convoluted mess of terms that must be meticulously tailored to align with the labyrinth of international laws governing intellectual property, confidentiality, and liability. The necessity for such bespoke agreements, especially when dealing with freelancers from diverse legal jurisdictions, adds a layer of complexity and risk that many businesses are ill-equipped to manage.

Perhaps the most daunting challenge is ensuring compliance with labor laws to avoid the costly mistake of misclassifying employees as independent contractors. This legal distinction is fraught with complexity, varying significantly across jurisdictions and carrying severe penalties for missteps, including back taxes, fines, and retroactive benefits. The delicate balance of maintaining the independence of freelancers while integrating their contributions into company projects is a legal tightrope that many businesses are not prepared to navigate.

Another thorny issue is the assignment of intellectual property (IP) rights. Contrary to the straightforward ownership of IP by employers in traditional employment relationships, the default position with freelancers can be alarmingly ambiguous. The presumption that any created work automatically belongs to the company is a dangerous misconception, requiring explicit contractual clauses to secure IP rights. This legal nuance, if overlooked, can lead to significant disputes and potential loss of valuable IP.

Concern #5: Confidentiality and Security

When engaging freelancers, companies often need to share sensitive information necessary for project completion. Despite non-disclosure agreements (NDAs) and other contractual safeguards, the dispersion of this information across a global network of independent contractors significantly increases the risk of leaks and breaches. The control over how this information is stored, accessed, and disposed of by freelancers is inherently weaker than with in-house staff, who are more directly subject to company policies and oversight.

Freelancers, utilizing their own devices and networks, pose a unique challenge in maintaining stringent cybersecurity protocols. Ensuring that each freelancer’s systems are secure and compliant with the latest security standards is a logistical nightmare, particularly when dealing with numerous contractors across different regions. This difficulty is compounded in industries subject to rigorous data protection regulations, where a single lapse could result in substantial legal and financial penalties.

The transient nature of freelance jobs exacerbates the potential for insider threats. Unlike permanent employees, whose loyalty and commitment to the company are generally higher, freelancers may not possess the same level of allegiance. This detachment, coupled with access to critical systems and data, can potentially lead to intentional or negligent acts that compromise company security.

Offshore Tech Staffing – Effective Alternative to Address the Downsides Above

If freelancers are a no-go for tech companies who are looking for rapid recruitment, are there any other options besides the old-school in-house hiring process? The answer is yes, and it is offshore tech staffing. This implies that a professional staffing agency like TurnKey will find, hire, and onboard the employees from offshore locations you are looking for, while also handling the administrative aspects of their employment (taxes, payroll, legal, benefits, etc.). 

Offshore Tech Staffing – Effective Alternative to Address the Downsides Above

Offshore Developer Freelancer

The recruitment and employment of an offshore employee will be as cost-effective as that of a freelancer (if not more, considering the long-term perspective). At the same time, an offshore specialist hired through TurnKey shows a greater level of commitment and integrates into your product team and culture as a full-time employee. Moreover, we carefully screen every candidate to ensure a high-level fit and a long-term tenure within your company – a virtue you can rarely expect with freelancers. 

Hire top offshore developers with TurnKey

Why Choose TurnKey Out of Other Tech Staffing Agencies?

Top Talent from Top Tech Regions. We focus exclusively on the Top 3% of development talent in Eastern Europe and Latin America — regions renowned for their exceptional tech expertise and compatible time zones. This ensures access to a pool of elite developers who can propel your projects forward with unmatched skills in any domain and industry you need.

Custom-Recruited Teams for Perfect Alignment. We keep no bench — we close every position by finding a perfect developer for your requests within several weeks. Through meticulous recruitment processes, we assemble dev teams that are tailor-made for your specific requirements. This approach guarantees that your offshore team is in complete harmony with your in-house culture, vision, and work ethic, making integration seamless and natural.

Enhanced Focus on Retention and Transparency. We help you decrease developers’ churn in half, cutting turnover by more than 50% through our special retention program. Moreover, we keep pricing transparent: you know how much you are paying in our flat service fees and how much your developers are compensated. This way, you can directly impact developers’ satisfaction and prolong their tenure within your company.

Mitigated Legal Risks with Employer of Record Services. The legal complexities and risks associated with offshore staffing are deftly handled by our robust employer of record services. This not only protects your company and your IP but also ensures that your focus remains on innovation and growth, rather than legal entanglements that our legal team will take care of.

photo 2024 02 12 20 36 44 2

Summing Up

Is using freelance websites like Upwork and Fiverr bad for your tech business? No, they can still be a helpful tool when it comes to finding specialists to take a certain part of your untypical workload. However, if you consider them as a main source for hiring tech specialists, you most probably expose yourself to unnecessary risks like losing a crucial developer during the project, breaking deadlines, or data leaks. 

All of these threats can be easily mitigated by offshore tech staffing, which is another cost-efficient option for hiring top specialists. However, instead of relying on automated platforms and unknown freelance contractors, you get talented specialists who were handpicked by a professional recruitment team like TurnKey’s. 

In TurnKey, we have been hiring offshore specialists for years, so we have established effective frameworks for finding, onboarding, and retaining top tech talent. Feel free to contact us if you want to try our offshoring approach yourself! 

FAQ

What is Toptal, Upwork, and Fiverr?

Toptal, Upwork, and Fiverr are top freelance websites that connect freelancers with businesses and individuals looking to hire for various projects. Each of these freelance job sites has its unique positioning and target audience.

Toptal prides itself on offering the top 3% of freelance talent, focusing on high-quality developers, designers, finance experts, project managers, and product managers. It is known for its screening process, ensuring that only highly skilled professionals are available for hire, catering mainly to businesses seeking premium freelance talent for complex projects.

Upwork offers a broader range of freelancers across numerous categories, from web development and graphic design to writing and customer service. This online work platform serves a wide range of clients, from startups to large enterprises, providing tools for posting jobs, interviewing, hiring, and managing freelancers. Upwork is suitable for a variety of project sizes and budgets.

Fiverr is known for its task-based model, where job seekers offer specific freelance gigs at fixed prices. It covers a wide array of services, including graphic design, digital marketing, writing, video editing, and more. Fiverr is popular among small businesses and individuals needing quick, affordable freelance services for smaller tasks or projects.

Why should tech companies avoid cooperating with freelance developers?

There are several cons of freelancing for tech companies looking for developers, namely reliability, long-term commitment, and integration challenges. Freelancers, while flexible and often cost-effective for short-term projects, may not provide the stability and continuous engagement required for long-term technological development. The variability in the quality of work, potential for missed deadlines, and inconsistency in availability can disrupt project timelines and affect overall product quality. Additionally, integrating freelancers into existing teams can be challenging due to differences in work culture, communication preferences, and operational practices, potentially leading to inefficiencies and knowledge gaps. For projects requiring sustained development, iterative improvements, and alignment with long-term goals, the transient nature of freelance engagements can be a significant drawback. Therefore, tech companies seeking to build and maintain a cohesive, reliable, and integrated development team may find that freelancers do not meet their needs for continuity, deep understanding of the project, and long-term commitment.

Why might freelancers pose a greater cybersecurity risk compared to in-house or offshore staff?

Freelancers may pose a greater cybersecurity risk compared to in-house or offshore staff for several reasons. Firstly, freelancers often use their devices and networks to access and work on company projects, which may not adhere to the stringent security protocols and standards that an organization enforces for its internal or offshore teams. This variance in security measures can introduce vulnerabilities, such as outdated software, insufficient malware protection, and insecure internet connections, increasing the risk of data breaches and cyber-attacks.

Secondly, the dispersed nature of working with freelancers across different regions and legal jurisdictions complicates the enforcement of consistent cybersecurity policies and practices. Ensuring that each freelancer complies with the latest security standards and data protection regulations can be a logistical challenge, especially for companies dealing with sensitive information or operating in highly regulated industries.

Furthermore, the transient relationship with freelancers may impact their commitment to maintaining strict security practices, as their connection to the hiring company is usually temporary and project-based. This detachment, coupled with access to critical systems and data, can potentially lead to intentional or negligent acts that compromise company security. Unlike in-house or offshore staff, who are more directly integrated into a company's culture and long-term objectives, freelancers' fleeting engagement may not foster the same level of diligence and loyalty toward protecting the company's digital assets.

What is the difference between offshore hire and freelancer?

The difference between offshore hiring and freelancers lies in the employment relationship, commitment level, and integration into the company.

Offshore hiring involves recruiting employees from outside the hiring company's country to work remotely on tasks and projects. These offshore employees are typically full-time, dedicated members of the team who are employed by or contracted through a professional staffing agency specializing in offshore talent. Offshore staff are integrated into the company's processes, culture, and long-term objectives, providing a stable and continuous working relationship. They benefit from the same level of oversight, training, and development opportunities as in-house staff, with the added advantage of cost savings due to lower labor costs in their home countries.

Freelancers, on the other hand, are independent contractors who work on a project-by-project basis, offering their services to multiple clients through platforms like Toptal, Upwork, and Fiverr. Freelancers are characterized by their flexibility, with companies hiring them for specific tasks or short-term projects without the commitment of full-time employment. While this provides businesses with agility and potentially lower upfront costs, it may lack the continuity, deep project understanding, and long-term commitment that comes with offshore or in-house teams. Freelancers have complete control of their process as they work autonomously on their own schedule, often juggling multiple projects, which can lead to challenges in integration, consistency, and adherence to company standards and security protocols.

What are the potential long-term cost benefits of offshore tech staffing versus relying on freelancers for project work?

The potential long-term cost benefits of offshore tech staffing versus relying on freelancers for project work are significant, primarily due to the differences in employment structure, commitment, and scalability.

Cost Efficiency. Offshore staffing can offer more predictable and often lower long-term costs compared to freelancers. By hiring offshore employees, companies benefit from lower labor costs in the employees' home countries while securing a dedicated team member. This model provides cost savings not just in hourly rates or project fees but also in the reduced need for constant recruitment and onboarding for new projects, as seen with freelancers.

Stability and Commitment. Offshore employees, being part of the team for the long haul, contribute to a reduction in turnover and the associated costs of hiring and training new freelancers for each project. The stability of having a dedicated offshore team supports sustained productivity and efficiency, translating to cost savings in project management and oversight.

Knowledge Retention and Intellectual Property. Offshore teams, through their ongoing involvement in projects, help maintain continuity and retain critical project knowledge and expertise within the company. This contrasts with the transient nature of freelancers, where each new project might require bringing new freelancers up to speed, increasing the risk of knowledge gaps and inefficiencies. Additionally, securing intellectual property rights is more straightforward and less risky with offshore staff than with freelancers, potentially avoiding costly legal disputes.

Integration and Management Overhead. Offshore staff are more fully integrated into the company's processes, culture, and communication channels, reducing the management overhead associated with coordinating a disparate group of freelancers. This integration leads to smoother project workflows and can significantly decrease the time and resources spent on project management and quality assurance activities.

Scalability and Flexibility. While freelancers offer flexibility for project-based work, offshore staffing provides a scalable solution for growth that can adapt to changing business needs without the constant need to find and hire new talent. Building a relationship with a professional staffing agency for offshore hiring also means companies can more quickly and efficiently scale their teams up or down based on project demands, offering long-term flexibility alongside cost benefits.

What criteria should tech companies use when selecting a professional staffing agency for offshore tech staffing?

When selecting a professional staffing agency for offshore tech staffing, tech companies should consider several key criteria to ensure a successful partnership and effective staffing solutions:

Reputation and Experience. Look for agencies with a strong reputation and proven track record in the tech industry. Experience in placing high-quality candidates in similar roles or projects can provide assurance of their capability to meet your specific needs.

Candidate Screening Process. Evaluate the agency's process for screening and selecting candidates. A thorough vetting process, including technical assessments, interviews, and reference checks, is crucial to ensure that candidates meet your technical and cultural fit requirements.

Compliance and Legal Expertise. The staffing agency should have expertise in managing the legal and compliance aspects of employing offshore staff, including knowledge of labor laws, tax regulations, and intellectual property rights in the candidate's country and your own.

Support and Communication. Effective communication and support throughout the recruitment process and beyond are essential. The agency should offer clear communication channels and be responsive to your needs and concerns.

Cultural Fit and Integration. Consider how the agency approaches the integration of offshore staff into client teams. Agencies that prioritize cultural fit and offer support for remote team integration can help ensure a smooth and successful working relationship.

Flexibility and Scalability. The ability to scale up or down quickly in response to your project needs is important. An agency that can offer flexible staffing solutions and adapt to your changing requirements can be a valuable partner in supporting your growth and project demands.

Cost Transparency. Look for agencies that offer clear and transparent pricing models. Understanding the full cost of engaging offshore staff, including any fees, taxes, and other charges, is crucial for budgeting and cost control.

Client References and Case Studies. Request references or case studies from the agency, particularly from clients in similar industries or with similar staffing needs. Feedback from other companies can provide insights into the agency's strengths and the effectiveness of its staffing solutions.

Selecting a professional staffing agency that aligns with these criteria can help tech companies build effective, efficient, and integrated offshore teams, supporting their long-term growth and project success.

March 5, 2024

TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.

Tailor made solutions built around your needs

Get handpicked, hyper talented developers that are always a perfect fit.

Let’s talk
Please rate this article to help us improve our content.

This website uses cookies for analytics, personalization, and advertising. By clicking ‘Accept’, you consent to our use of cookies as described in the cookies clause (Art. 5) of our Privacy Policy. You can manage your cookie preferences or withdraw your consent at any time. To learn more, please visit our Privacy Policy.