Govind Davis, who runs a business software firm in Cleveland, has never met his assistant Jackie—although they work closely together. All he’s seen of Jackie is a photo she posted with her online résumé and on Skype, which is almost their sole means of communication.

Jackie Cullen, whom Davis hired four months ago, is known as a virtual office assistant, an independent contractor who does secretarial work from her home in North Carolina. She works only when needed, usually about 30 hours per week at $12 per hour, to book travel, schedule appointments, and do research. “Certainly, it takes a mental adjustment,” says Davis, chief executive of MCF Technology Solutions. “But Jackie, she’s turned out to be great, and I have no concern about paying her.”

Virtual assistants are a small but growing phenomenon at companies looking to minimize overhead. Because they are contractors, virtual assistants are paid only for hours that they actually work instead of a guaranteed salary for a 40-hour week. Not only do companies save on employee benefit costs, but there’s also no real estate or equipment to fund, no need to lease space for an extra desk or buy a computer.

Acquiring a virtual assistant, however, comes with additional peril. Can you trust someone you’ve never met to handle sensitive corporate information? And how will you know if they’re goofing off?

Virtual assistants are not new. Before the Internet era, they used faxes and telephones to keep in touch with their employers but remained a relative rarity. The term virtual assistant had yet to be coined. Today, they are far more common, according to Kathy Colaiacovo, marketing director for the International Virtual Assistants Association, a trade group that provides certification for its members. Exact numbers are impossible to come by, however, because there are no estimates about the size of the niche. The association, however, has around 700 members.

Companies have become more accepting of remote and mobile workers in recent years as online tools have made it easier to keep in touch with the home office and do clerical work from afar, Colaiacovo says. “When I started four and a half years ago, I had to explain a lot to people what a virtual assistant does,” she says. “I rarely have to do that anymore.”

Of all companies, small businesses are the most likely to hire virtual assistants, Colaiacovo says. A mom-and-pop operation does not necessarily need a full-time assistant, often having only enough work for just a few hours a week.

Companies also gain from the flexibility. Instead of being locked into paying for a set number of hours per week, a business owner can adjust according to the amount of work needed. As with many contractors, a virtual assistant’s hourly cost tends to be higher than that of a full-time employee. However, virtual assistants based overseas in, say, the Philippines or India usually charge far less.

Colaiacovo recommends that the parties sign a contract that spells out what is expected. In many cases, employers pay a deposit up front—half the fee for a project, for example.

Even under the best of circumstances, virtual assistants aren’t for everyone. People who hire them must be willing to give up some control and be comfortable communicating online. “If they need that person there to touch the shoulder and say, ‘This is what I need done,’ it just doesn’t work,” Colaiacovo says.

Davis, the software CEO, says that a virtual assistant is a natural fit for his company, most of whose 45 employees work from home. In all, the business has six to eight virtual assistants, although some of their duties go beyond clerical work. Typically, Davis says he hires virtual assistants for a limited time or for a small project to see how they do. If they excel, he keeps them.

Jackie is the second virtual assistant to work directly for Davis. A previous assistant floundered, for which he takes some of the blame. “I just didn’t take too seriously that I had to vet her,” Davis says. “She was helpful on a few things, but she didn’t have the range of skills.”

Vetting a virtual assistant by checking references and online sites is obviously important. In the end, trust is crucial, particularly if you’re going to share account passwords, for example.

When seeking work, virtual assistants post their profiles on job sites, such as oDesk, which charges employers a 10 percent commission on top of what they pay their hires. Companies can also go through agencies that provide virtual assistants.

Some employers are inevitably concerned that a virtual assistant will charge for hours when they are actually watching television. Silicon Valley’s oDesk, for example, provides some assurances. When an assistant is logged into a job on their computer, an automated program takes six snapshots of the screen every hour. The employer can check those images remotely to see whether their assistant is fooling around on Facebook (FB).

Jackie usually communicates with Davis through Skype’s instant messenger, as he does with most of his employees. They rarely talk on the telephone.

One of the few downsides of her being 500 miles away, Davis says, is that he has to mail her paperwork that piles up on his desk rather than just handing it to her. But the cost savings outweigh any negatives, he adds.

“You have to form some new brain circuits to get used to it,” says Davis. “But I don’t personally feel like I have any downside to it.”
Kopytoff is a Bloomberg Businessweek contributor in San Francisco.