A History of Offshore Freelancing and How the Virtual Employee was born from the success and failure of the offshore freelancer

The beginning of this millennium was witness to cheap, fast broadband internet connections and powerful PCs. In turn, this resulted in a shift in traditional thinking; the need to work from an office was diminishing; work could now increasingly be done from home or for that matter anywhere in the world.

This coupled with highly talented, low costing English speaking professionals from Third World countries and innovative entrepreneurial thinking gave birth to a new industry, "offshore freelancing". The reason why offshore freelancing was categorized as its own industry or why offshore freelancing was distinguished from "freelancing" as it was known in the conventional sense was because of two distinctive attributes that offshore freelancing had over freelancing: a) an offshore freelancer would work from home, not on site b) offshore freelancers were being hired from Third World countries.

Why did this industry take off at such a frenetic pace and experience exponential growth? The first reason has already been mentioned above; there was no longer always a need for work to be done in the office. By hiring a freelancer to work from home, employers could significantly save on office rental, overhead and maintenance costs. And why freelancers from foreign countries? Partially because freelancers from Third World countries commanded lower fees but also because countries like India have an abundance of talent in fields like software development. In summary, by hiring offshore freelancers employers were benefiting on several fronts: lower office costs, less investment in hardware, quick access to talent, no recruitment burdens, no tax, no insurance, no employee benefits, no labor law responsibilities etc...

As freelancing is short term contractual work, the projects that were being outsourced to freelancers in countries like India were low budget, the vast majority costing less than $400 US dollars per project. Therefore, relatively speaking, there was not a lot SMEs had to lose by "trying the water". In turn, this resulted in tens of thousands, if not hundreds of thousands, of clients eager and willing to outsource via this freelancing method. Because there was not a huge amount to lose by freelancing and results were often positive the industry grew exponentially. Although there are widely acknowledged limitations and problems with offshore freelancing, nevertheless today the industry is an established and proven business practice. Offshore freelancing is no longer a rarity; rather in the business world it's a norm.

Following the success of the offshore freelancer, the Virtual Employee was always going to be a natural progression. If companies were successfully outsourcing short term projects, was there any logical reason to stop there? If a US company could successfully utilize a freelancer in India for a one off web design project, (provided the company had the need) was there any justifiable reason not to hire the same individual on a permanent, full time basis? If small to medium sized firms in the US were benefiting from outsourcing 1 week, 2 week and 6 week short term projects it became obvious that US companies could also benefit by outsourcing on a more long term and more permanent basis, i.e. hiring full time employees. It quickly became apparent that SMEs had in actual fact even more to gain and benefit from outsourcing the more valuable and long term the position than low budget, short term contracts. And to further reinforce this view, small companies only had to look up at their bigger counterparts for yet more justification. Multibillion dollar corporations like Microsoft, Oracle and British Telecom began outsourcing full time, permanent positions to countries like India by the thousands around the same time.

With the demand there, the transition from freelancer to Virtual Employee would be a very straightforward one, some might have presumed. Rather than hiring a freelancer for one month, simply hire a freelancer for 6 months or a year and the offshore freelancer is very easily transformed into, a full time, long term Virtual Employee. In fact this is what a lot of SMEs from the US started to do. When companies from the US realized the benefits of hiring a freelancer for 1 month, the same companies began wanting to hire on a more long term basis. The problem arose, how to freelance for logn term project or how do you hire an employee in India for 1 year? The thought of going to a country like India or China and setting up a subsidiary office was not only unappealing but also ineffective. The only viable solution for SMEs wanting to hire an employee from a country like India on a long term basis was to hire a freelancer on a long term basis. With no other alternative this is what many US companies started to do. Sensing the huge potential benefits from outsourcing full time positions to countries like India, US companies began hiring freelancers for long term positions.

This move, however, often backfired and was usually a very unproductive and costly one. Firstly, there was a lot more at stake when hiring a full time, employee. The repercussions of a long term position going pear-shaped is many times more damaging than a one off, low budget project. Whilst there was more to gain by outsourcing full time positions there was also more to lose should the process go wrong. And the chances of something going wrong when working with a freelancer on a long term basis are much more than when working with a freelancer on a short term basis.This is because for full time employment certain work environment practices and standards are mandatory, whereas for freelancing they are optional. And when US companies were hiring freelancers on a long term basis these fundamental aspects of full time employment that were vital were missing.

For instance, the importance of professionalism or disciplined conduct in full time employment is crucial. This is because a full time employee is more likely to be working on a more important aspect of your business than a freelancer. An employee not meeting a deadline, not working agreed hours or being unavailable for a conversation is not only frustrating and unprofessional but, more importantly, very unproductive. In addition to poor work ethics, freelancers also became known for not taking responsibility; failing to observe clear instructions and rushing through work to get the project complete as quickly as possible. From one perspective, such conduct was almost inevitable; freelancing from home for multiple clients from a foreign country requires an individual with integrity and considerable faith and trust from the client's side.

When unprofessionalism such as this creeps into one's business it may begin to hurt the very core of a company. By contrast, when working on a short term project, lower standards of accountability can often be tolerated. If a freelancer is unavailable for a conversation or works different business hours than the client, this may be unproductive but it is likely to be on a much smaller scale. This is because freelancers generally work on non-core related projects. Furthermore, due to the nature of short term projects, often clients do not even have a need to frequently interact with their freelancer and so the client wouldn't be in a situation where they would encounter the difficulties mentioned above. In contrast, to work with an employee productively the employee must be regulated, although this is not necessarily the case with freelancers.

The shocking reality is that such instances of poor work ethics are very common when working with freelancers on a long term basis. Often the scenario can be even more disastrous. Freelancers disappearing in the middle of a project, stealing intellectual property rights or having lied about their skills and work experience have been known to happen.

Why is it so difficult to work with freelances on a long term basis? Why are offshore freelancers notoriously known for their unprofessional conduct? In one respect the fault does not lie with the freelancers. The discussion comes to a very obvious but often overlooked point, namely that a freelancer is a freelancer and so if utilized as a full time employee, things are likely to go wrong. This is not necessarily the fault of the freelancer.

Often clients fail to appreciate the ground reality and the psychology of human nature. Even if a client hires a freelancer for a long term position, psychologically the freelancer will always regard himself as a freelancer. There is no employment contract in place, no provisions that offer the individual real job security, no employee benefits, no physical office to work from etc...Any individual will always appreciate and value a long term, full time job more than a long term freelancing project. An individual has more to lose and gain from a long term job than a long term freelancing project and so when in full time employment an individual likely to behave more diligently, professionally and responsibly. Irrespective of the intentions of a client, the trust factor from a freelancer will always be that much less when working from home, for a client situated thousands of miles away. In short, even if a client wants to hire a freelancer on a long term basis, psychologically, a freelancer will not regard himself as a full time employee because the same level of security just isn't there. With a lot less to lose and lot less to gain standards can wane, and conduct, professionalism and responsibility are often compromised.

This thinking and mindset that a project is simply a project, regardless of whether it is the intention of the client to hire on a long term basis, results in freelancers working with multiple clients. And because freelancers are not supervised it is difficult to know just how many clients one freelancer is working with at any given time. There is a tendency, which clients are oblivious to, amongst freelancers from countries like India, to take on as much work as possible, even when not pragmatic. This often results in freelancers prioritizing one client's work over another's and thus again compromising standards.

Another often never considered obstacle to hiring a freelancer on a long term basis is cultural differences. There is a cultural norm right across Asia, where freelancers will say they understand when they don't, agree to deadlines they know they cannot meet, to say they can do something, when they know they can't and to avoid expressing any of their views which may not be in harmony with that of the client's. To summarize, often freelancers from Asia are "yes men". This behaviour stems from thousands of years of social norms. It is not that freelancers from Asia are acting dishonourably, rather conversely, their intentions are quite admirable, namely that to avoid disappointing, disrespecting or creating conflict with their client. The problem for clients becomes that they never know if a freelancer genuinely understands or if their freelancer can really meet the stipulated deadline etc... What is required is cultural training and induction, not by the client but by a person who understands this mentality and thinking process. If not it can lead to problems at some stage.

Finally, the way one works with a freelancer and a full time employee will in general also drastically differ. When working with a full time employee remotely a client will, at some point, need to interact, collaborate and communicate with their employee. To do this, stable infrastructure and powerful hardware are necessary. And provided an employee is equipped with such resources, working remotely and closely with an individual anywhere in the world is very easy. Freelancers from Third World countries are, however, once more known to have poor infrastructure and limited hardware resources. Frequent power cuts, unstable and slow internet connectivity and outdated PCs make close collaboration virtually impossible. Video conferencing, PC sharing, downloading large files etc are very difficult obstacles to overcome. However, when hiring a freelancer for 3 weeks for a small, low budget project, even basic and sporadic collaboration is likely to be sufficient, and the need for close interaction may not arise. The problem arises when clients hire offshore freelancers on a long term basis only to then realize that close collaboration is necessary but not always possible. Due to the intrinsic nature of full time employment it is simply not possible in the vast number of cases to hire an employee remotely if the client cannot collaborate closely with their employee. If an individual is unable to speak with their client because they lose internet connectivity or there is power failure, outsourcing can very quickly become more cost ineffective and frustrating than hiring locally.

The combination of all these potential hurdles and inefficiencies often resulted in nightmarish outsourcing experiences for clients who hired freelancers on a long term basis. Often clients were repeatedly contracting with numerous different freelancers, only to encounter the same unproductive experiences. This resulted in a vicious cycle continuously repeating itself, which eventually led to disgruntled clients. Ultimately, this resulted in a huge time and monetary investment from the client's side which defied the objective of outsourcing in the first place.

The successes of offshore freelancing proved that SME outsourcing to countries like India certainly could work; it also proved that Indians had the ability and talent to work successfully for US companies. The shortcomings of the freelancer, however, made it obvious that it was not realistic or practical to hire a freelancer working from home on a long term basis. Offshore freelancers could only be hired for short term, low budget projects and even then sometimes there could be problems.

VirtualEmployee.com offers an innovative solution to overcome the problems encountered with freelancing. Freelancing focuses purely on the individual; it does not cater to the setup and management required to work remotely on a long term basis. "Outsourcing" and "Virtual Employee" in one respect are terms that mislead and inaccurately depict VirtualEmployee.com's service. In reality, with VirtualEmployee.com, clients are effectively opening their very own offshore subsidiary office in India. VirtualEmployee.com's office becomes a remote extension of the client's local office. The Virtual Employee works solely and dedicatedly for the client. And VirtualEmployee.com manages the client's employee on their behalf and in accordance with the client's instructions. VirtualEmployee.com's managers are the client's physical representatives in India, working with and for them. In practical terms, when clients outsource with VirtualEmployee.com they are actually opening an offshore office in India, with a management team and dedicated employee ready to go.

So, whether a client hires just 1 or 50 employees, with VirtualEmployee.com the client practically has their very own offshore office base in India. The only difference being the scale and size of their offshore team and "office". Nevertheless, in both scenarios, the service and standards are exactly the same. And it is because the same high standards are maintained irrespective of whether a client hires 1 or 50 employees that hiring a full time employee on a long term basis from India is now a financially viable concept.

It is not financially cost effective for a US company to open an offshore office in India for just one or even a handful number of employees. Opening an offshore office only becomes cost effective when done on a mass scale. And this is the heart of the problem that VirtualEmployee.com has been able to overcome. Many US companies want to open offshore offices in India so that they can hire full time, dedicated employees. However, this is not practical for these US companies and so they are forced to hire freelancers instead. This is why VirtualEmployee.com's service is innovative, because clients piggy bank or "leach" off our economies of scale and management, such that it is practical and financially beneficial for a client to open an offshore office in India for even just one dedicated full time employee. With just the click of a mouse button, with VirtualEmployee.com clients can open an office in India and that too for just one employee.

With a Virtual Employee working from a professionally administered office as opposed to from home like freelancers, the VEs are equipped with first class hardware and infrastructure. In some cases, the Virtual Employees are even better equipped and have more resources to avail than the client themselves. Close collaboration is no longer an issue and physical distance becomes irrelevant. Advancements in computer technology mean that working remotely is now no different from working physically from the same office as an individual.

Furthermore, by having a Virtual Employee work from an office the conduct and actions of the employee can be monitored. Small issues when working with freelancers that cause considerable inconvenience, such as attendance failure or slow correspondence are not issues when working with VEs. And if the client ever has any difficulty with their employee at any time, the problem can be quickly resolved since onsite VirtualEmployee.com managers are only a phone call away to follow up on the client's employee and resolve the issue as soon as it occurs.

Virtual Employees also only work for one client and clients can be assured of this because VEs work from a supervised office. Not only does this mean that the client's work is the Virtual Employee's ultimate and only priority and focus, but there is also an important psychological impact of this. Freelancers work with numerous clients simultaneously, but for a full time, dedicated employee all stakes are in the hands of their one employer. The win-loss percentages are much higher in full time employment and so a Virtual Employee cannot afford to get complacent. The psychological impact of this is that employees are more likely than freelancers to go out of their way to appease their client. A VE himself will know he must conduct himself in a dignified manner, otherwise they risk losing their full time job. This in conjunction with VirtualEmployee.com's managers continually supervising the employee and the client working directly with their VE means the unprofessional conduct clients experience when working with freelancers is not an issue with VEs.

VirtualEmployee.com's managers are at all times supervising and monitoring the working of all Virtual Employees. The significance of this cannot be underestimated for this physical presence is what holds all Virtual Employees accountable for their conduct and results. Freelancers aren't held accountable because there is no supervising body present nor is there a contract and hence no legal ramifications. But with VirtualEmployee.com, our physical presence and employment contract is why all VEs are held accountable for all their actions. This is why Virtual Employees are more dedicated and have better work ethics than offshore freelancers.

VirtuaEmployee.com's twin-layered recruitment process also helps match clients with their ideal employee. This is because VirtualEmployee.com's recruitment department invests considerable time and resources to first clearly understand what the client actually wants and needs. From there on many candidates are screened, interviewed and tested, thereby filtering out only the very best candidates. Furthermore, technical experts are utilized to screen potential candidates and to aid the client if they are not technically proficient. After all this the client would then have the opportunity to conduct their own round of interviews and tests before making any decision to hire. The accuracy and success rate of this system can be attributed to the fact that it cannot be corrupted and considerable diligent man hours and resources are invested to find qualified candidates. By contrast, the reviews of freelancers are open to manipulation as individuals with strong feedback reviews often sell their accounts to other freelancers. When hiring a freelancer, clients are solely reliant upon feedback reviews when making a decision who to hire. This system is a lot less reliable than VirtualEmployee.com's iron-clad recruitment process. From the outset VirtualEmployee.com kick starts the outsourcing process in the right direction by ensuring the client has a pool of highly talented and qualified candidates to select from. With the right employee, the rest is very smooth sailing with VirtualEmployee.com.

VirtualEmployee.com's service also includes induction and training programs so that cultural differences do not become barriers to working productively. Dedicated technical support, HR and accounts departments are also available for both client and employee to be utilized at any time. If a client wants to know the number of leaves an employee took in a year, needs some HR-related advice, wants to review the time sheet of their employee or wants VirtualEmployee.com to speak on their behalf with their employee etc, the client can avail any such services at any time. Ultimately, this makes outsourcing and working remotely easier, simpler and efficient.

With VirtualEmployee.com, clients can hire employees from any office-based background e.g. law, accounts, software programming, SEO, graphics design, engineering, architecture, data entry, etc. All the client's outsourcing and employment needs are thus in one place, "under one roof". The advantage of this is that a client's entire offshore team can all work from one place.

Finally, a client has a lot more security when hiring a Virtual Employee over a freelancer. As all the parties enter into a legally binding contract, clients have confidence that their VE won't simply abscond half way through an important project, unlike a freelancer. Furthermore, because of Non-Disclosure Agreements (NDAs), legally binding contracts, our physical presence, restricted hardware access, protective on site processes and measures such as cloud computing, clients do not need to fear about data security or intellectual property theft.

VirtualEmployee.com has pushed the boundaries much further than freelancing, optimizing outsourcing to such a degree that clients now have a truly efficient and cost effective way of hiring offshore full time employees. VirtualEmployee.com's service is far beyond anything that can be matched when hiring a freelancer. Not only does the Virtual Employee eradicate the problems encountered when working with freelancers, VirtualEmployee.com also ushered in a revolution in new areas like recruitment, data protection, client control and remote collaboration.

In hindsight, one can say it was inevitable that small to medium enterprise outsourcing started from offshore freelancing. The Virtual Employee could only rise once the offshore freelancing model had been tested, proven and established. Only once US companies felt comfortable working with offshore freelancers would the confidence then be there to take the process one stage further into full time employment. In this respect, it is only because of the success of the offshore freelancer that the Virtual Employee could come into fruition. Equally it is from learning from the failures of the offshore freelancer that the Virtual Employee was able to understand what clients truly needed and were then able to address and improve upon these shortcomings.

The offshore freelancer and the Virtual Employee address two different markets. They both serve their own exclusive outsourcing segments. Offshore freelancers should only be utilized for short term, low budget projects, where limited interaction is sufficient and the client does not want to manage the freelancer. Virtual Employees should be hired for more valuable, long term full time employment positions, where clients want project management authority and want to work directly with their employee. Unfortunately, often due to a lack of experience, knowledge and research this distinction can become blurred for some clients, resulting in them hiring offshore freelancers for long term positions. If this occurs, an offshore freelancer cannot compete with a Virtual Employee, because clients get a lot more for their money with a VE. For only a marginally higher cost, (often the cost of freelancing is not even cheaper but the same) clients get a significantly better service, attain higher levels of efficiency, professionalism and enjoy cost benefits.