How freelancer engagements can optimize "Employee cost" for a startup?

The evolution of startups in recent years has become inevitable in order to avoid employing permanent employees with fixed salaries.

Many of the startups are under the development stage or are just funded with the Founder’s savings or loans.

Considering these financial challenges, today’s startups require talent, expert advice, and the right skills to position their product in the market.

As per my observation of few startups, I am writing this article with reference to how startups are optimizing their employee cost through engagement of highly talented and skilled experts in their respective business verticals:

1. Conversion of an employee to a freelancer: For any employee to understand the work culture, nature of work, deliverable that the position demands and the market potential of the company will require 6 months to 1 year at the most. Over this period, it is certainly possible to assess the number of hours that job requires for a week or month. So, converting such positions to freelancers paid on the basis of number of hours is the best method startups are choosing these days. The same will help the professionals to engage their remaining time with some other startups and explore new avenues as well as be engaged in the current startup.
2. Social Security Costs : Social Security costs in the hand of employers will become so minimal as the liability of Maternity Benefits, Health Insurance costs, ESI, PF, PT, etc., won't be applicable once the employee enters into a contract of freelance mode. Only unavoidable liability here is the TDS u/s 194 J at 10% deduction on the billing amount and the same will be credited to the freelancer’s PAN every quarter.
3. Reduced office & admin expenses: Expenses like employee refreshments, power, internet, computer maintenance charges, will be minimized as these freelance advisers prefer to work from home or any other location. Hence even if they come to the office to work, they would spend a few hours on the premises themselves and would prefer working with their laptops.
4. Assignments/results based engagements: Certain positions require the assignments and objects to be achieved within a certain timeline. In the case of cost constraints, it is also happening in startups for the simple reason that it becomes easier to engage with them through #Freelancer #Upwork, etc, or even in known contact professional circles.