Has the Virtual Tech Company Arrived Yet?

Suppose you go back to predictions made over the past 25 years. If those predictions were believed, we should all be independent contractors, heavily utilizing technology to work full-time from home. Many would work in temporary teams, within a virtual tech company or companies worldwide.

Has it happened yet?

More than one definition for the virtual tech company

First, let’s define what virtual can mean, as it can mean different things to different people. The two main ways I would segment “virtual”:

• Regular employees or contractors who are working remotely from a main physical corporate location
• Workers who aren’t full-fledged “employees” such as temps, sub-contractors, interim, and consultants

For this article, I am referring to both of these definitions when I talk about the virtual tech company. Workers fitting each of these definitions have the potential to offer companies increased flexibility. Additionally, lower fixed costs and often higher skill levels for a given project/function at a specific point in time. Of course, in many cases, a worker could fit into both the definitions in the bulleted list above.

Virtual adoption varies by function and industry

In general, companies that are early adopters of technology tend to be further down the virtualization path. So you tend to see more virtual tech companies than non-tech companies. This makes sense because technology itself is a strong enabler of the ability to use the virtual model. In the old days, it was much harder to be adequately connected as a non-employee, when working remotely with only a landline phone and fax machine. So industries that adopt technology faster, tend to go virtual faster as well.

Old-line industries that have stayed with manual methods longer tend to rely more heavily on the on-premise, full-time employee model. Of course, some industries just don’t lend themselves to heavy virtualization. It’s hard for a physical retailer to virtualize most of its jobs. But it’s important to note that there are always exceptions to this type of generalization on an individual company basis.

Virtualization also varies widely by function. As alluded to above, it’s harder to virtualize a retail clerk. On the other end of the spectrum, programmers and some call center employees can be located wherever reasonable phone service and internet connections are available. Many attributes influence how quickly an industry or company proceeds down the virtualization path. Companies very concerned about security often evolve in this direction much more slowly than industries and companies where security is less of a concern.

Tech companies are definitely on the leading edge of the virtual trend

The Internet and related technologies have provided a tremendous platform for driving more rapid acceptance of the virtual work model. Software and hardware companies tend to be early adopters of productivity-enhancing technologies. So it’s natural that the virtual work model is progressing faster in tech companies than in most other industries. Even in technology companies that still rely primarily on full-time employees, it’s commonplace to work from home occasionally. Many folks attend meetings remotely from home or on the road via video conferencing or online meeting software. The pandemic greatly accelerated this trend which was already occurring, of course. In my consulting practice, I increasingly see small or early-stage software companies utilizing primarily or even completely a virtual tech company business model.

Is AI the new virtualization?

The new wrench in this discussion is the hot topic of technology today. That would be Artificial Intelligence or AI. AI is possibly the ultimate in virtualization. Many of the assumptions stated above could be quickly changing. For example, jobs that couldn’t easily be remote-based before may be completely replaced by a Virtual Human Employee, or agent.

I recently had my first “positive” interaction with a virtual customer service agent. I’ve written several times previously about the frustration of dealing with virtual phone agents. But this one was different.

I saw on my most recent credit card bill late charges. In addition, there were some associated interest charges. Somehow my bank had paid the credit card bill ONE DAY LATE. This did not make me happy! So I called my credit card company, and a virtual agent answered. It asked me what I wanted; I said “I’m calling to complain”. The virtual agent then responded that it needed more information. I responded, “I’m calling to complain about late charges”.

The virtual agent quickly looked at my account. It said that it saw the late charge AND the associated interest charges. The AI just as quickly stated that it was reversing BOTH charges. Next, “Was there anything else it could help me with”?

I was very pleased and frankly dumbfounded. I had never had this type of interaction with a non-human. Quick, efficient, and solved my issue. I was on the phone for less than a minute.

This is the new AI at work. It will change the world as we see more of it.

All things considered—on-premise employees are still preferred

No doubt there has been a slow march toward virtual business methods, if not a completely virtual tech company over the last decade or two. In my experience, however, most hiring managers still prefer a full-time employee sitting in the office next to them over all other options. AI may change this, however. Stay tuned. There are many, many exceptions to this. But on a general basis, I believe this is still overwhelmingly true. People still are most comfortable with the feeling that they will be able to deal with their subordinates in person. They would rather have what they feel is the added comfort of a full-time permanent employee.  One whom they believe they can get to know better and believe they can count on them more confidently over the long run.

Tradeoffs are important

The reality is that there are trade-offs to both the new virtual and old standard on-premise, full-time employee approaches. That will be the case with AI employees as well. The virtual approach offers flexibility, better matching of cost and workload, and the potential for a better skill fit for a particular position or project. The on-premise employee approach is favored because of stability, known availability, cultural fit, and company-specific training. AI employees are so new that it’s too early to fully understand the tradeoffs.

In a perfect world, a mix of all three would be utilized and every project and position would be evaluated individually, to decide which model is a better fit for a particular situation. I do think that in many industries this will come to pass. But old habits die hard and I don’t expect we’ll get there in my lifetime.

So what do you think about how virtual the world is today? How virtual it will become in the long run? What has been your experience and your view of the future? Post a comment and share your thoughts on where we’re at in this long-discussed trend.

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