My 2 cents...hiring employees can be a mess, and expensive. At least here in the US, you have unemployment insurance, social security. You have to be able to cover workers comp claims.
Disgruntled (and not so disgruntled) employees have a nasty habit of suing their previous employer. Many of these lawsuits are frivolous, yet will still cost the employer money to fight. Some of these include claims that an employer didn't offer 15 minute breaks throughout the day, or denied the employee a lunch break. It can be total bullshit, but it hapens all the time just the same, and costs just as much to fight.
Hiring contractors has its own problems too, but, in my experience, hiring employees is more costly than hiring contractors/outsourcing. I have a family member who owns a business. He has been sued 3 times this year - one was an ex contractor and the other two were ex employees. Only one of these lawsuits has any real merit to it at all, and not much. He even loaned one of these people money for rent during a tough period while they were still employed, and this person is still suing him. One guy is claiming no lunch breaks, even though he spent half his day outside smoking pot during work.
Obviously if you have a large business it will be necessary to hire employees (I guess), but for me, I will avoid it as long as I can.
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