It is common for a software development team to consist of a mixture of permanent and freelance staff. In this article, Paul Wells of Modelistic Software explores the pros and cons of the two options, drawing on his experience of seven years of freelancing and five years in permanent positions. He now runs his own software tools company.

Permanency offers many positives

Bundled in with a permanent position are offerings to help keep you happy. Sick pay and annual leave are standard, as are training, and the security of redundancy rights and a notice period.

For higher profile positions, you can expect relocation costs to be met by the company as you join or if it is a start-up company, your own chunk of the company as share options. Depending upon the line of business, there could also be substantial staff discounts.

A more established organization may even offer a company car, childcare, opportunities to travel and bonuses. Finally, promotion is the most enticing aspect of a permanent position with the scope to earn greater status, authority, management power, or ultimately a directorship and golden handshake.

The outsider is disadvantaged

If you select freelancing, you not only forfeit this dazzling array of incentives, but face further obstacles. If you are aiming for your CV to read head of software engineering or project manager you’ll be disappointed; even humbler titles such as team leader and technical architect are rarely attained by a software development freelancer.

It is common for non-permanent staff to be omitted from steering the direction of the project and choosing the tools which will be used. Worst of all, freelancers are routinely hired at the 11th hour as a last resort when a project is already in trouble. If you do manage to hit the ground running, some of your permanent team mates may be suspicious of your intentions, and scrutinize your contribution.

If you do survive a couple of years as a freelancer, you may well find it difficult to persuade any employer that you genuinely wish to return to permanent employment, and are not just hoping to plug a gap between freelance assignments; it's a one-way ticket.

Freelancing also brings added complexities when obtaining personal credit. And finally, there's the burden of running a limited company, with obligations for accounts, insurance, corporation tax, VAT and self assessment.

Freelancing has an upside

So having demolished the case for freelancing, let's take a look at the reasons why you may still consider that route.

A freelance assignment is a highly decoupled arrangement, revolving around payment for provision of a service. It is the simplicity of the arrangement which holds the appeal, along with the six following reasons.

1. Avoid the uneven steps of the career ladder
   Promotion can be an awkward concept. First, not everyone will rise to the position that they are capable of as quickly as they should; it just isn’t possible in a pyramid-shaped organization. Worse than that, you bear the concern that you may not get hired, or promoted, if you pose too much of a threat to those above you.
   For the freelancer, that concern is lifted; you can simply do your best work knowing that that will make everyone happy. You can move from assignment to assignment without waiting for the organization to promote you.
   
   
2. Know what is normal
   Each time you hone your skills in one discipline, you increase the likelihood of being re-hired on a different project with similar requirements. Even so, tools and methods will vary for better or for worse across projects and you will build up your own definition of what is 'normal'. This knowledge of 'the normal' across the industry is of great value, and hard to gain from within the confines of a single organization.
   
   
3. More flexibility on holidays
   In practice, you won't want to take much unpaid holiday; but it is good to know you can take as much as you like – ask anyone who has only half a day of annual leave remaining to cover all eventualities for the next six months. Yet by working your holidays into the gaps between assignments, you can take a break of a few months if your cash flow will let you.
   
   
4. Clearly defined role
   Because a contract is a business to business agreement, the expectations on both ends are more squarely defined; a permanent position tends to be more open ended.
   
   
5. Dictate own direction
   Effecting a change of direction for yourself within a company can be a slow process; it is often easier to jump ship but each time you do this you lose the status you have built up. Jumping ship is routine in freelancing, and each time you move you get the chance to dictate your direction.
   
   
6. Make savings on other lines of business
   Permanent employment requires the employer to deduct tax at source. Obviously, funding another line of business from taxed income is a significant handicap. A contract puts you ahead with this immediately, as you can fund your product development directly from you consultancy revenues. The same applies to equipment, books, tools, training and certification, all of which you would otherwise have to persuade you employer to buy, or pay for yourself from taxed income.

Instinct determines final decision

The obstacles to freelancing are much more numerous than in permanent employment, but you gain many freedoms. Ultimately, each person’s instincts tip the balance in favour of one route over the other.

Paul Wells wrote this article in November 2005.