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I think it is easier to hire a software development company. In this case you have more guarantees
1. Lack of commitment - they may suddenly drop your project, even without any prior notice – whole time wasted
2. Lack of professionalism and legal obligation – may result poor outcome and waste of time
3. May even outsource your project to someone else, further deterioration in quality.
4. Lack of skill - may get stuck in middle of the project due to lack of skill, you many need to get another skilled freelancer.
A possible solution to all these drawbacks could be contracting with outsourcing companies providing software services. In that case, you should seek recommendation for the company from someone who got benefitted from the company, maybe a friend? For my business, my friend suggested Staff India since he also got his work done by them. I didn't have to face those issues. Also, the cost was much lower - almost half- since they operate business in Indian region where labor cost is much lower.
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I have an good experience at one such Marketplace called Nasscom e-marketplace, I recommend you to try it, as this is governed by the reputed NASSCOM body, where you can get trusted partners to outsource your services for better quality of work & other unique advantages over freelancing.
And the second is undercharging. If you’re prepared—with a portfolio, some references from people you’ve worked with, and knowledge about the industry—you should make sure that you charge a reasonable rate (based on the line of work you’re doing, as well as your financial needs).
I agree with your second point about undercharging, that exists.
If Emily is a buyer of software services she will need to quantify the requirement in detail. If she is a seller of freelance services she will need to learn how to extract a quantifiable needs analysis from her buyers.
This issue is not restricted to the SME sector, many large businesses, even multi-national businesses are appallingly inadequate at process and needs analysis.
If a freelance is not told what is required, and work returned is not tested by the business on a stage by stage basis, the result will at best be 'a poor fit' and at worst be a total waste of time and effort.