Most home-based businesses are fairly small… but some have 1,600 employees.

Evalueserve , one of the leaders in the knowledge process outsourcing industry, has grown to over 1,600 employees since it was founded in 2000. Of its four-person management team, three work out of their homes: the CEO in Austria, the Chairman in California, and the head of Sales & Marketing in Maine. Only the COO works out of a traditional office -- in India.

How can you manage people you almost never see in person? Many managers face that challenge periodically, but people in the outsourcing industry face that challenge as a fundamental part of their business model. That's true in the outsourcing of rote tasks (e.g. call centers), but even more true when outsourcing higher value-added tasks in the "knowledge process outsourcing" (KPO) industry.

According to a Deloitte Consulting study, the global knowledge process outsourcing industry is projected to grow to approximately $17-18 billion by 2010, of which India is expected to account for $12-14 billion. KPO involves knowledge-intensive business processes that require significant domain expertise, analytic skills and judgment, and decision making capabilities (e.g. financial valuation, legal analysis, or market research.) Evalueserve (EVS) provides outsourced custom research, analytics and intellectual property solutions to over 1,100 bulge bracket investment banks, top tier strategy consulting firms, and many other demanding clients.

EVS's entire top management and sales team only meet together in person once a year. Its four-man management team had never met together in one room until just two years ago. Its 50-person sales force is made up entirely of people working out of their homes.

Marc Vollenweider, co-founder and CEO, argues that the virtual structure gives EVS several major advantages.

• Speed: EVS can respond quickly to client inquiries, because they have 24/5 coverage across major time zones.
• Cost: EVS has a low cost base because they do not have to pay for expensive Western office space.
• Ease of recruiting: In a tight labor market, offering Client Executives (salespeople) the chance to work from home is very attractive to many people. Client Executives with children often find working from home particularly attractive. Two different sets of Client Executives are married to one another.
• Entrepreneurialism: Bob Daigle, VP of Marketing & Sales, observed that the flip side of being isolated from the team (i.e. being "virtual") is that isolation "fosters an attitude of independence and self-reliance." Although the Client Executives support one another, to survive in the organization each person has to be a self-starter.
• External focus: Daigle also observed that the absence of internal bureaucracy forces a focus on external events, not internal. There is no big internal bureaucracy to dwell in (and on) like the one Daigle recalls growing up in for the 20 years that he worked at IBM.