Tips for Hiring Engineers: Freelancers, Firms or In-house

When starting a new product business, you’ll likely need to hire engineers.

Unless you happen to be a jack of all trades who can do electrical engineering, mechanical engineering, and software development, or if you’re lucky enough to have a co-founder team with all of these skills, you’re going to have to bring on outside engineers.

There are three options for bringing on outside engineers. You can hire individual freelancers, you can work with a large design firm that has multiple engineers, or you can bring on a full-time engineer that works solely for your company.

NOTE: This is a long, very detailed article so here's a free PDF version of it for easy reading and future reference.

This article reviews these three options and the pros and cons of each.

Freelancers

Hiring individual freelance engineers has many unique advantages and disadvantages that are important to consider before doing so.

Lowest cost

The biggest advantage of hiring freelance engineers is that it’s the cheapest option. If budget is a concern and minimizing costs is of high priority, which is quite common for startups, then freelancers are going to be your best option.

I suggest searching for freelancers who are located in countries with lower wages. You can find very good, low-cost engineers in countries like India, Russia, and other parts of Asia, for example. These engineers may have a lot of experience but because of their location can’t demand the high rates of engineers in places like the U.S.

I would recommend searching on Upwork.com. This is by far, I believe, the best website for finding freelance engineers or really any type of freelancer.

Note that, if budget is very limited, another option is to bring on co-founders that have the skills you or your team are missing.

However, while bringing on co-founders may be the cheapest option initially, it can be one of the most expensive options in the long-run because it’s going to cost you equity in your company.

Requires extensive management

Most products are going to need multiple engineers. You’ll likely need at least an electrical engineer and someone to design the enclosure for your product, which is usually an industrial engineer.

If your product has lots of moving parts and it’s mechanically complex, then you may also need a mechanical engineer. On top of that, you’ll also need a software developer.

If you decide to hire freelancers, you will have to hire and then manage at least three different individuals.

You will be the person coordinating each engineers work. You will also need to resolve any conflicts or design issues between the engineers. You will be the one to make sure that all the pieces fit together.

For instance, say you have a printed circuit board that an electrical engineer made. You get your prototype and the PCB is too large.

The electrical designer says, “Well, the mechanical designer made the enclosure too small.” In response, the mechanical designer says, “No, the electrical engineer made the PCB too large.”

That’s a very simple example of an issue that will require your time and energy to resolve. Ultimately, you are the one that needs to resolve these types of engineering conflicts.

No checks and balances

The other issue is that freelancers are typically solo engineers working from home, so they don’t have formalized checks and balances.

They don’t have other people on their team to review the design or review the specifications, which increases the chance of having problems with your product design.

If you hire freelance engineers, independent design reviews are critical. Any large tech company or design firm implements design reviews.

When I worked at Texas Instruments, any new design I created would be presented to an entire room full of design engineers just looking to find a problem.

Always have someone else review the freelancer’s design. Design reviews will almost always identify some issues, and they serve as the checks and balances that are missing from a solo freelance engineer.

Less stability

Another negative with hiring freelancers is that they come and go often. Many people begin freelancing because they got laid off from their job or they disliked their job for some reason and simply left.

For a lot of these individuals, freelancing is only temporary employment; they’re doing it to pay the bills while they look for other work.

If you hire a freelancer like this, it’s possible that your engineer could disappear overnight, and that’s a painful process to go through when you’re mid-development.

It can be catastrophic if you have an engineer leave, especially if it’s the only one you have. On top of that, you then have to find someone to finish up their work.

Do everything you can up front to make sure they are going to stay around for the entirety of the project. One thing to determine ahead of time is how long they’ve been working as a freelance engineer.

If they’ve been doing it for only a month, then I would be concerned that they could leave at any moment. Make sure to clarify what their plan is and confirm that they are going to be around for the long-term.

Lack of project management experience

Another downside to freelancers is that they’re not as formalized as the other options. A freelancer is not going to be able to manage their time, schedule, or cost nearly as efficiently as a design firm will.

There’s a very good chance that the freelancer will get too busy after you hire them to invest all of their time and effort into your project.

They may start out strong, only to take on other clients and have to multitask between different projects. Next thing you know, your project is low on their priority list, which can be very frustrating.

When I outsourced the mechanical development for my own product, I went through multiple engineers for this reason alone. I became frustrated that my project wasn’t their only focus and that they were working on others instead, but that’s simply the reality of working with freelancers.

If you want someone that’s going to dedicate all of their time and effort solely to your project, then you will need to hire a full-time engineer.

A freelancer needs to take on many projects to make a living, and it’s an aspect that you’re going to have to accept if you choose to go the freelancer route.

Inaccurate cost estimations

Related to project management, freelancers typically don’t estimate costs well. You’re much more likely to go over budget when working with a freelancer compared to working with a design firm that has been established for some time.

Unlike freelancers, design firms have very strict procedures in place on how to estimate project costs accurately.

Be warned that freelancers will always appear to be cheaper than a design firm initially, but they may not be as cheap as the initial estimates suggest. Odds are, they’re more likely to go over budget than a design firm is.

It’s important to note that some freelancers may be willing to do parts of the design for a fixed price.

For instance, at one point years ago when I was doing freelance schematic and PCB design, I charged a fixed price for the schematic design and the PBC layout.

However, I would switch back to an hourly rate for debug, because this was one of the more challenging aspects of product development when it came to time estimation.

By the nature of debug, finding the problems can take a long time and finding a solution for them can also take an extended period of time.

Anytime you find a freelancer that will give you a fixed pricing, I encourage you to select this option because it lowers your risk of going over budget. With hourly billing, all of the risk is on you and none of it is on the person doing the work.

With fixed pricing, all of the risk is on the designer. If it takes them twice as long as estimated, he or she will end up making half the hourly rate as what they thought. In this case, you don’t have any additional risk because it’s a fixed, guaranteed price.

Lack of documentation

Freelancers typically don’t do a good job documenting. In fact, most of them don’t document at all.

My experience is that for freelancers, documentation isn’t something they even think of. However, documentation is critical for the professional business that you are running.

Say you need to switch engineers mid-project, for example. It’s going to make it much easier for the next engineer to pick up where the previous one left off if everything is documented.

This is true with hardware design, and it’s especially true with software. Anyone that’s done any programming knows how critical comments are and how important documentation is to being able to understand code – especially a complicated code.

Ensuring that proper documentation is made can be difficult when working with freelancers, and you’ll need to push them to do so. They will typically put some comments in the code, but they’re often sporadic.

Proper documentation takes time, and freelancers aim to get their job done as quickly as possible. They’re less concerned about a future engineer who has to try to make sense of the program in the future.

Additional tips for hiring freelancers

If hiring a freelancer is the best option for you, make sure they have a skillset that meets your needs. Skillsets vary greatly across engineers, and it’s important to determine a freelancer’s skillset before hiring them for your company. Some questions to consider are:

Do they have the necessary skills? If hiring an electronic engineer, for example, can they do the schematic design? Can they do the printed circuit board design layout? Can they do the debug and board modifications required? Can they do the firmware programming, mobile apps, etc.?

I recommend hiring someone that can at least do schematic design, PCB, debug, and firmware. They don’t have to do the mobile app or PC software. That can typically be done by a software developer.

However, the firmware programming is so embedded in the hardware that it’s typically best if it’s the same person doing both. Generally, I recommend that you try to find someone that can do all of these steps.

Do they have a properly equipped lab? If they’re just getting started and all they have is a voltmeter (they don’t have an oscilloscope, function generator, or any of the other more expensive equipment that is needed to debug electronics) then you’re going to want to know that up front.

You want to find someone that has the right equipment, because when it comes to designing electronics, a big portion of the work is going to be in testing everything, evaluating it, finding bugs, and finding fixes for those bugs.

You need to make sure that you’re hiring someone that has the necessary equipment to do this.

Have they designed with similar technologies before? If your product has wireless functionality, have they designed lots of wireless products? Have they done high power if yours is a high power AC based design?

While it’s not required that they have experience designing the exact same type of product, you do want to make sure they have the same basic skills you need.

Do they understand injection molding? For a mechanical engineer or an industrial designer (the person that’s going to design your enclosure) the key thing you want to make sure of is that they understand injection molding, and all the restrictions and requirements revolving around it.

Otherwise, you’re likely to get a 3D printed enclosure prototype that has no chance of ever being manufactured without a complete redesign.

Design Firms

Design firms are another option for your startup. Design firms are made up of multiple engineers, which affords many pros and cons that are important to consider.

Increased efficiency

The main advantage of a design firm is that they typically have all the engineers you need in one company or under one roof, and that makes things much more efficient.

It’s much easier if one engineer can simply walk over to the desk of another engineer and ask a question, or they commonly work together even if not in the same location, so that they know how to communicate.

Less management required

In addition to greater efficiency, hiring a design firm drastically lowers the oversight required by you. When working with freelancers, you have to manage them all.

You need to make sure everything fits together and deal with anything that doesn’t. If you hire a design firm, they handle all that internally.

With design firms, you’ll still be involved in the process, but you won’t be dealing with each individual. Instead, you’ll just be dealing with a project manager.

This eliminates scenarios where one engineer blames another. For example, your electrical engineer says it’s the mechanical engineer’s fault, or the firmware developer says it’s a problem with the hardware, but the hardware engineer says it’s a problem with the firmware.

These are all very common scenarios, and they will be managed by the design firm instead of you. If you’re not comfortable managing engineers, then a design firm is likely the way to go.

Note that to manage engineers, however, you don’t necessarily have to be an engineer. You do need to have some technical background and basic knowledge, but you don’t need the same skill set that engineers have.

If you have a management background and you’re comfortable managing complex projects without doing all the mechanical work, then freelancers could be a better option.

More checks and balances

Design firms have more checks and balances than freelancers. While freelancers don’t have any of these, a design firm is at the other end of the spectrum.

Established firms typically have procedures in place and hold internal design reviews, which significantly reduces the likelihood of unnecessary mistakes.

More stability

Design firms are more stable. They’re typically not going to disappear overnight like a freelancer can.

Sure, companies do go out of business, but as long as they’ve been doing this for a while, the likelihood of that happening during your project is much, much lower than it would be for a freelancer.

Better project management

Design firms are also better at managing their time, estimating costs, and estimating schedules. The initial cost and timeline estimates may not look as good to you as a freelancer’s, but odds are, they’re more likely to be correct and accurate.

A more accurate cost estimate is one of the greatest advantages to hiring a design firm over freelancers. You’re going to get a much more realistic estimate on what your project is going to cost.

A design firm will always cost you more, but the key is that they’re going to be a lot better at providing you an accurate estimate of the project costs upfront.

Note that most firms and freelancers will bill on an hourly basis, and it’s very difficult to estimate how long a project is going to take to the exact hour.

However, a freelancer’s estimate is typically going to be quite a bit lower than what it’s going to be in the end. Going over budget is much more likely with a freelancer.

Less cost-effective

The biggest downside to hiring a design firm is that they have significantly more overhead, which comes with having lots of engineers in a company. That means the cost is going to be higher to you – much higher.

If your budget is more flexible and you have limited technical skills, then a design firm might be your best option.

However, if saving money is more of a priority and you have some technical background, or feel comfortable trying to manage multiple engineers, then hiring a freelancer is likely the best way to go.

In-House

The final option is to hire your own engineer in-house. Truth be told, this is not typically a realistic option for a startup.

Engineers are expensive. To hire one full-time and pay them benefits, at least in the United States, you’re looking at well over $100,000 a year.

Rarely does this make sense when just starting a new company. However, there are a few things to consider if this is an option for you.

Full-time dedication

By hiring in-house, you get a dedicated engineer who is solely focused on your project. This is compared to freelancer engineers and those at design firms who have other projects to work on at the same time.

Most expensive option

As mentioned, most startups aren’t in a position to afford a full-time engineer at the start. Hiring in-house is typically done once sales increase and you’re company is generating revenue and profit.

Only then does it typically make sense to bring on full-time engineers and designers with the goal of developing future products or working through issues with your current product.

Need to hire multiple engineers

When hiring in-house, you’ll likely need multiple engineers, including an electrical engineer, mechanical engineer and software developers.

It’s extremely rare to find one person that can do all three and, even if they can, they’re not going to be the best at all of them.

Summary

Three of the main options when hiring engineers for your new startup, including freelancers, design firms, and in-house engineers.

If saving money is your biggest concern but you have some technical skills and feel comfortable managing engineers, then freelancers may be the best option for you.

However, if you have more money to spend, less time or technical skills, and you don’t feel comfortable managing engineers, then a design firm is most likely the way to go.

Rarely will it ever make sense to hire a full time engineer on your own, at least until you are generating significant revenue and profit.

The key to success is knowledge of the obstacles that lie in your path and a realistic plan on how to overcome those obstacles. Helping you accomplish this is the goal of the Predictable Hardware Report.

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Bob Durk
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Bob Durk

Hi John, I have been following your articles for quite some time, and always learn something along the way. I just completed a one off project that I got “pulled into”.
A co worker did not complete the proof of concept, and liked my design ( even after I bowed out of the project). A few weeks before the project deployed( a specialized analog clock controller), I was asked to go with my design. I had been asking for budget and project details with little support, so it was a challenge.
I had made 2 iterations, and both worked as required. I made a one off circuit board, with a basic enclosure. The code was tested, commented and required timing was verified. I created the schematic and documented the alignment procedure.
The total burden was 48 hours for R&D, programming, testing, schematic, PCB, enclosure,and full documentation. They were “surprised” it took that long.
I am not an engineer, just a hobbiest who has been doing hands on all my life. I enjoy working through issues and finding solutions. I have made things “just because I can”.
What are your thoughts on a small project cost like this?
Bob D

John Teel
Admin

Hi Bob,

Thanks for your comment! Yeah, I’m always a bit shocked when I hear entrepreneurs say something along the lines of what you describe. 48 hours is not a long time for what you describe and I think who hired you doesn’t have realistic expectations. Big tech companies have teams of engineers working around the clock on new products, so it’s unrealistic to think a single engineer can do it all in only a little over a week’s worth of time. That’s pretty crazy actually! Maybe send them over to my blog so they can get a feel for how much work really goes into developing a new product.

John

Bob Durk
Guest
Bob Durk

Hi John, thanks for the quick reply and insight. I actually thought of you when they initially questioned the hours. I will definitely point your blog out to all who would benefit from your insight and experience.
Bob

John Teel
Admin

Thanks Bob!

Heath Raftery
Guest

Unusually, I can’t say I agree. Hiring low cost freelancers is a bad idea for the inexperienced. You’re almost guaranteed to need a complete re-design. Low cost freelancers are only useful if you can pair them with highly experienced engineers. You’ve made this exact point really well before. Use the high calibre resources to do the design and review, and the low cost just for implementation. Honestly, if you haven’t got engineering capability in the founding team, you can’t outsource it – you either need an intimate development partner (a small engineering shop that don’t take on too many customers) or some internal resources. It’s too crucial to throw over the fence and expect something useful back. $100k+ on a salary is not outrageous compared to $40k sunk on something that is not a viable product. If you don’t have the funding for a full time role, then a small design firm is perfect – you get the nimbleness of a freelancer with the professionalism of an experience engineer, and you don’t add to your wages bill. If it’s not manufacturable or if it’s not what the customer wants, then it’s a dead end proof of concept. To produce something viable requires care and attention from an experienced engineer.

John Teel
Admin

Thanks Heath, and you’re allowed to not always agree with me:) Although I actually do agree mostly with what you say.

Low cost freelancers are not the ideal solution but for many entrepreneurs it is the only affordable one. A few years ago I used to only recommended that entrepreneurs work with larger design firms. But after a while I realized this is just not realistic for many on a limited budget. And I also worked with quite a few entrepreneurs who were technical enough to make the freelancing model work well for them.

The only way I ever recommend entrepreneurs outsource to freelancers is if they have the skills to manage them correctly, and/or have others with the necessary skills reviewing their work. I’ve worked with many project managers that may not have the skills to design an actual product, but they have the necessary technical and management skills to manage those doing the actual work.

Also low-cost doesn’t have to mean low quality or low experience. For example, I’ve worked with two “freelance” engineers in India successfully on many projects. They are several times cheaper than any US engineers, but they happen to also be two of the best engineers I’ve worked with.

As always, thanks for your comment!
John

John Teel
Admin

Rereading the article I do mention finding lower cost new engineers, so I see your point. This is a bit misleading though and I should have clarified it better (and I will now with a minor update that section).

Hiring engineers without a lot of experience only makes sense if you are an engineer yourself, or you have an experienced engineer helping you manage and review their work. An inexperienced entrepreneur plus an inexperienced engineer makes for a very inexperienced team, which is definitely not a good idea.

In general though I find it much better to find engineers that charge low rates because of their location, not because of their lack of experience.

Thanks again,
John

Mike Cheich
Guest
Mike Cheich

Great article as usual John!

Somewhat outside the scope of the article but kind of related…

If you can get a solid reference for someone – that can go a long way in helping you find a good hire, freelancer or otherwise.

Also, I think as you start to “get into” your industry as a business, you need to always be “building your rolodex”. And then asking around to your contacts for a freelancer/firm that has helped them for similar needs. I was able to work with a person in my niche to help design our circuit board, but only because I had been willing to reach out and build real relationships.

Side Note on Upwork:
I have had a lot of luck on Upwork personally (not for design work, but for other jobs). I find searching for the exact skills you want, then filtering further by price/location/ ect. Then skimming the results, hand pick some that stand out, and keeping the job closed only to invite. YMMV, but it has sure worked for me thus far.

John Teel
Admin

Awesome comment as usual Mike! I completely agree that referrals are best, especially if you lack the skills to be able to judge their work (which is usually the case or else you’d be doing it yourself). This is why I include a list of recommended engineers as part of my report service for new products.

Regardless though one of the best ways to ensure you only hire a good engineer is to be sure to get independent design reviews of their work before you go too far with them.

Good point on Upwork. For small jobs I like to just post a public job, but for something so big and serious as hiring someone to design your product then I absolutely agree that you should pick and choose who you invite to your job. Keeping in mind that the best engineers are likely not applying for every job they see.

Thanks as always for your comment!

Simone
Guest
Simone

Hi John,
Thank you for the interesting read. At what point in your development process should you hire engineers in your opinion?

John Teel
Admin

Thanks Simone for the comment and question. You should plan to hire engineers once you understand all of the costs and steps that lie ahead, and once you’ve taken your product development as far as you can on your own. Just make sure you know all of the costs required to develop and scale a new hardware product, before you start spending thousands of dollars on engineers. For example, if you only have the money to pay for 20% of the development then there isn’t any point in starting the development yet.


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