Allocated Squad or Full-Time Hire: Which Costs Less for Your Company?

The salary is just the beginning. A full-time employee's (CLT) compensation carries payroll taxes and provisions that nearly double the real cost: employer social security contributions, the severance fund (FGTS), a 13th salary, vacation pay with a bonus, plus benefits like health insurance and meal vouchers. And the math doesn't stop at the monthly cost. There are costs almost no one puts in the spreadsheet:

• Recruiting: a tech hiring process takes months and consumes hours of managers' and HR's time. Through a recruiting agency, there's also a fee proportional to the hired person's salary.

• Ramp-up: a new developer takes months to reach full delivery capacity. During that period, the company pays the full cost for a fraction of the productivity.

• Turnover: the tech market has high turnover. Every departure restarts the recruiting and ramp-up cycle, plus severance costs and lost project knowledge.

On paper, yes. In practice, freelancers handle one-off, isolated tasks well, but they charge for something else: predictability. Freelancers work for several clients at once, have variable availability, and no commitment to continuity. If they become unavailable mid-project, the knowledge leaves with them.

• Works well for: a quick fix or a small, isolated delivery.

• Doesn't work well for: sustaining a product or a months-long project — the risk of unavailability usually costs more than the savings.

With squad allocation, the company hires delivery capacity, not people. The monthly fee already includes what becomes an invisible cost in direct hiring:

• No payroll taxes: the relationship is between companies. There's no 13th salary, vacation pay, FGTS, or labor liabilities.

• No recruiting cost: the team already exists, already works together, and already has a method. The time between signing the contract and the team running is days, not months.

• Replacement included: if a professional leaves, the replacement is the allocator's responsibility, with no cost or rework for the client.

• Built-in technical management: the squad comes with technical leadership and a delivery process, which reduces the load on internal managers.

• Scaling flexibility: you can grow or shrink the team according to the project phase, something impossible to do with full-time hires without severance costs.

Here's an objective look at how full-time hires, freelancers, and allocated squads compare on the criteria that matter most for this decision:

• Short answer: for continuous, permanent demand, with your own product at the core of the business, full-time hiring tends to pay off in the long run. For projects, demand spikes, or companies where technology is a means rather than the core, an allocated squad delivers more predictability for a lower total cost.

A few signs it makes sense for your company:

• Your backlog grows faster than your team: the demand exists, but hiring would take months the business doesn't have.

• The project has a beginning, middle, and end: it doesn't make sense to build a fixed structure for a temporary need.

• Technology isn't the core of the business: hospitals, energy companies, manufacturers, and franchise networks need good software, not their own engineering department.

• The company already tried to hire and couldn't: competing for developers in today's market is expensive and slow.

• Is an allocated squad the same as outsourcing? It's an evolution of the model. In traditional outsourcing, the company hands off the entire project and loses visibility. With squad allocation, the team works integrated into the company's day-to-day, with full transparency about what's being done, but without the cost and management burden of direct hiring.

• How much does allocating a squad cost? It depends on the team's composition (number of professionals and seniority) and the contract length. The practical benchmark is to compare it with the full cost of a CLT hire for the same team, including taxes, recruiting, and ramp-up. In most project-based scenarios, the squad comes out cheaper in total cost.

• How soon does the squad start working? Since the team already exists and already operates together, work usually starts within days after scope alignment, versus the months of a full recruiting and ramp-up cycle for a full-time hire.

• Can I increase or decrease the team during the contract? Yes. This flexibility is one of the model's main advantages: the team follows the project phase with no hiring or severance costs.