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Outsourcing to 'virtual assistants' cuts overhead costs

Telecommuters who do administrative tasks, usually on a contractual basis, bring specialized skills and don't receive benefits -- or even desks.

July 10, 2009|Emma L. Carew

WASHINGTON — Michael Hanik used to have 12 employees, a warehouse and trucks to run his medical devices catalog company.

But four years ago, he turned to the Internet to look for ways to reduce overhead costs for his Rockville, Md.-based Total Medical Systems. He now has just three employees on the payroll but as many as 50 contractors working for him, some of them known as virtual assistants.

The term, around since the Internet became widely available, encompasses anyone who telecommutes and does administrative tasks for other businesses, usually on a contractual basis. Most do tasks such as document preparation, paperwork and accounting. Some have niche areas, such as bilingual translation or creative services.

In the current economy, Jane Weizmann, a senior consultant at Arlington, Va.-based human resources consultant Watson Wyatt, said she was seeing more businesses with a "part-time cadre or network of people" who telecommute and bring different skills to projects as needed.

"It's a lot less expensive than having resources on staff, sitting on the bench and waiting," she said.

Virtual assistants enable companies to save on real estate and equipment, as well as on benefits, which can add 35% to a base salary, Weizmann said.

She cautioned, however, against businesses relying entirely on outsourced work and contractors. The high levels of turnover can create an unstable workforce.

"You can supplement your core capability, but you can't replace it completely with 100% outsourced work," she said.

The numbers are difficult to track because there is no formal certification and not all people doing similar work call themselves virtual assistants. But one small trade group, the International Virtual Assistants Assn., said its number of new members doubled from 2007 to 2008. To date this year, the group has added 160 members, bringing membership to about 900.

Hanik estimates he's decreased his business costs 65% through outsourcing and using virtual assistants. "It's a tremendous revolution," he said.

Association officials say the number of virtual assistants is increasing as companies lay off their administrative and executive assistants. Plus, the barrier to entry is low because most people already have the equipment they need, such as computers, printers, fax machines and Internet access.

"You meet people at the conferences who say, 'Oh, after I was laid off four times, I decided to become a virtual assistant,' " said Lauren Hidden, marketing director for International Virtual Assistants. "They get tired of the insecurity of being an employee."

Kim Lazernik, a former computer software tester, took a pay cut by starting her own firm, Virtual Computer Services in Silver Spring, Md. (Her old job paid more than $100,000 a year.) She now works about 20 hours per week, charging $35 to $40 per hour. But, she says, her expenses for the business balance out with the money she saves on commuting and career clothing.

Still, she doesn't make enough to be saving for retirement. "I love what I do. I wake up happy every morning," she said, but added, "I'm thankful for the years I had a 401(k)."

Lazernik, 49, said the career change was permanent. She added, "There's no reason for me to stop doing this."

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Carew writes for the Washington Post.

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