PEO VS Freelance/Contract Employees – The Best Option for Getting Remote Work Done
PEO (Professional Employer Organization) and Freelancing / Contracting are two of the five ways of international business expansion in India. In this blog, we will discuss PEO and Freelancing as methods for remote hiring in India. Which method you choose will be influenced by your bespoke needs and situations. But we will walk you through the scenarios best suited for either of the two methods, so you can take an informed decision. Before we begin, it is necessary to understand that freelancing / contracting is a way to get remote work done in India, and is not very conducive as a strategy for business expansion in India. However, PEO can very well be considered for expanding business in India. The rest of the blog talks about PEO and Freelancing simply considering you want to delegate some work offshore and not as part of a larger business expansion plan.
- What is freelancing suitable for?
In the current business scenario, freelancing portals like Fiverr, Upwork etc. have gained popularity. Outside India, companies were used to subletting some work to freelancers on a contract basis. The trend has now visited India as well.
Typically, offshore companies identify modularized work which they can get done by remotely hiring freelancers or contractors / consultants. Sometimes, businesses have their go-to freelancers whom they know and trust. But it may happen that you may need to enter into contracts with unknown strangers who can work remotely for you. You won’t always be able to control these variables.
Additional risks come into play if you want to continue to hire freelancers in India for continual projects or contract work. Are the freelancers part time employees in some other organization? Have they signed clauses which doesn’t allow them to work outside their employer’s scope anymore? Besides, they may be freelancing for your competitors! You cannot say with full certainty that the Indian freelancers you hire is working on other projects which invokes a conflict-of-interest clause.
Considering the above factors, freelancing turns out to be an apt solution only for short independent assignments, the delays and complications of which won’t deeply impact your longer running projects.
- When to consider PEO for remote work?
As against freelancing, the nature of PEO makes it highly advantageously for steady remote work. With PEO, you can identify resources through PEO agencies in India, and run with them for longer duration projects and uninterrupted work.
Also, PEO resources comply to your policies so you can add as many confidentiality clauses as you need. Additionally, you can do thorough background checks on each and every remote employee in India you hire, refuting the threat of conflict-of-interest clauses kicking in.
From a cost perspective, maintaining a team of freelancers for longevity turns out to be very expensive. Freelancing rates are calculated mostly per hour or per deliverable. A freelancer may charge anywhere between 30USD to 60USD per hour for hourly contracts and in 4-figure ranges for project-based pricing contracts. Longer projects tend to have modifications on the fly, leading to changes in the scope of work, ultimately causing inflations in the freelancers’ charges.
In PEO, however, you can very well achieve longevity. PEO pricing is negotiable, and will comply with the wage policy in India. PEO net costs amount to be far lesser than freelancing. They are calculated per employee, and don’t vary with slight variations in the work. On an average, PEO fees are between 40 USD per employee, per month to 160 USD per employee, per month. The agency also takes anywhere between 2-12% of the total payroll.
All things considered, there are more benefits to PEO for longer work than freelancing. The only aspect where freelancing trumps PEO is the tax aspect. For certain slabs, tax rates are lesser for freelancers. Above 30,000 INR, the TDS deducted per transaction is 10%. With PEO, you have to deduct taxes for every employee on your payroll, which amounts to a larger figure.
But we doubt tax is a major point of consideration for anyone looking for getting remote work done. When hiring remotely in India, consider quality work, comparatively cheaper rates, and as few legal complications as possible. The solution that fits all of these criteria is definitely PEO rather than freelancing. If you are looking to get maximal throughput from your operations in India, take a look at the PEO services we offer.