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Why do SMEs hire freelancers in India but not full time employees?

Freelancers vs Dedicated Employee

The hiring of freelancers from Third World countries has become a very popular trend. The internet and PC revolution has changed the way we work. Today, we can work for a company from anywhere in the world. The question, then, arises: Why do SMEs (small- to medium-sized firms) hire freelancers from India so frequently; and why are the occurrences of the SMEs hiring full-time permanent employees from India are as so rare?

It is a moot point that hiring permanent employees is not in the interests of SMEs. Hiring freelancers has proven to be highly successful because of low costs and high talent, so surely the same rule would apply for permanent employees? Furthermore, the vast majority of multinational corporations have opened offshore offices in India to hire employees on long-term, permanent positions. If outsourcing permanent positions works for MNCs, won’t it also work for SMEs? The market for outsourcing full-time employees certainly exists; why then has this form of outsourcing remained fairly redundant for SMEs?

A freelancer cannot be a full time, permanent, long term employee:

Hiring freelancers is often a productive move. However, they are often associated with a lack of professionalism. There are several reasons why freelancers sometimes suffer from such a reputation and, thus, why they are unsuitable to work on a long term basis:

  • Freelancers usually work remotely and not from the office of the client. Therefore, this can result in unprofessional conduct.
  • They often work on multiple projects at once
  • Freelancers in Third World countries have different cultural mindsets
  • They often work in poor conditions, i.e. frequent electricity and internet failures
  • They are self-employed and so are not very accountable to you
  • There is no one physically supervising a freelancer whilst they work
  • Freelancers work on short-term, low-budget projects and so freelancing projects are not valued as highly as full-time, long-term jobs. This can lead to complacency on the part of a freelancer.
  • There are no safeguards against data security and intellectual property theft

Permanent employees are more professional than freelancers:

If freelancers are unsuccessful in any particular case, it is almost entirely because of the reasons listed above, i.e. an unprofessional/unstructured setup. With permanent employees, companies require a greater level of professionalism than with freelancers. Outsourcing logo design to a freelancer is one thing but outsourcing large volumes of work to a permanent employee requires companies to take the following things into consideration:

  • Repercussions of outsourcing confidential and sensitive work
  • Ownership of works
  • Enforceability of legal contracts
  • Tax, insurance, health and employee benefits
  • Infrastructure – if an employee is working remotely then there is a heavy requirement for high levels of collaboration. This is only possible if the employee has a fast internet connection, a good PC and other hardware peripherals. Furthermore, Third World countries face long electricity and internet failures almost on a daily basis
  • Can the employee work the same hours as you?
  • Paying the employee; can you trust the employee?
  • Recruitment – how to interview and test candidates?
  • Accountability – difficult with an employee thousands of miles away
  • Management of employee – again difficult when not physically present

It is for these reasons that we have witnessed a boom in outsourcing to freelancers but not so much to full time, permanent employees. A higher standard of care, professionalism, accountability, structure, infrastructure, and management is needed when outsourcing a long term job. So how does one go about hiring a full-time, permanent employee in India? Hiring a freelancer for a long-term position because of the above-stated reasons is simply impractical. The negative repercussions one could face as a result of hiring a freelancer on a long-term basis could be more serious than the potential benefits one could gain. Herein lies the reason as to why the freelancing industry has grown exponentially but hiring permanent employees in India is dwarfed by comparison. SMEs simply do not have any available method by which they can hire employees from India. provides the solution:

Outsourcing full-time positions was once considered unfeasible. However, we have made it a possibility. Virtual Employee Pvt. Ltd. is a third party that provides SMEs with their dedicated Virtual Employees who work from a well-equipped office in India. We sign a legally binding contract with our clients. The contract stipulates that the security of any sensitive data/information is the full responsibility of that service provider. It has also been clearly stated that ownership of works lies with the clients. This arrangement offers far greater security than hiring a freelancer does. The service agreement includes office space, office hardware, management, customer service, and a full-time employee. Though the employee works directly for and with the client, the client does not actually enter into any employment contract with the virtual employee. Unlike with freelancers, all tax, insurance, and employee benefits are considerations for the vendor and not the client.

  • Our office conditions match international standards. There are no issues with electricity, PCs, and internet connections. Freelancers, however, are not in a position to guarantee this.
  • The client makes payment to and not to random freelancers. The client can, therefore, be assured that their money is in safe hands. A freelancer’s reputability is never really proven.
  • We hire employees for the client. The client has the option of interviewing many candidates before deciding to choose the right one for them. Recruiting an employee to work the same hours as the client is not a problem.
  • A Virtual Employee works directly for and with the client, but works from our office in India. We manage the client’s employees on their behalf; this ensures the employee is working dedicatedly and working the correct hours. By supervising your remote dedicated employees, we ensure accountability and management of employees. Freelancers, however, work alone and so this hierarchical authoritative structure is not present if the client is hiring freelancers. Our managers supervise the Virtual Employee on the client’s behalf, ensuring that the client’s instructions are followed. In case of any problems, the client simply needs to make a call to our client support department to get it resolved instantaneously.

So, SMEs can efficiently, easily and cost-effectively hire employees with us. Our long-term professional relationship can turn around your business.

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