How to Manage Virtual Employees

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.

Similarly, Daigle observed that the virtual structure eliminates many political issues: "Not only do we not have much of the water cooler, idle time type of communication, and resulting issues -- we don't have time for it. I think there is some truth that the four of us [of the EVS management team] have got by without serious conflicts over 6 full years because we're somewhat forced (by geographic non-proximity) to stay out of one another's way, trusting each other to execute. Despite being geographically dispersed, all four senior managers are actively involved in both sales and operations, in touch via email, instant messaging, and phone daily. However, because we are distant we are forced to act independently and to focus on execution."

When David Teten was dating his then lady friend (now wife), he asked an older friend for advice on marriage. The older man, who had recently celebrated his 50th wedding anniversary, observed, "everyone says that the secret to success in marriage is compromise… but that's completely wrong. The secret to success in marriage is domains. If you and your wife are discussing how to decorate the den, and you want blue and she wants pink, then the compromise is stripes. It's much more effective to determine that certain questions fall under the domain of one person, and then let that person take responsibility for all questions in that domain." EVS is adopting a similar philosophy internally.