Behold the Virtual Company by Sam Varghese (Syndey Morning Herald,
The Austrailian IT Register was founded in 2005 by Owen Baker, who sees a real advantages in the distributed development business model.
The virtual team approach relies on independent subcontractors who for the most part work from home. The company provides a web-based extranet for its staff and clients.
Overhead is low with no corporate office space, and also because there's no cost when staff members are "on the bench" between gigs. They tend to work for smaller clients and see profit margins of around 20 - 30 percent - too small to attract much attention from traditional IT vendors. Despite unpaid bench time, consultants typically make 20 to 50% more than they would as salaried employees.
Baker says "...a virtual company such as ours is seen by many as the way of the future for many organisations - a mobile flexible workforce that can change and adapt as needs come and go. I personally think this is the kind of model that will shape the future of 'work and career' as we know it over the next 20 to 30 years..."
What about the difficulty managing from a distance? Baker's approach, simply put, treats people like grownups: ask for reasonable estimates on each job, and expect people to live up to them. There is a potential advantage in that most independent consultants are self-starters to begin with.