Elance is essentially a virtual office building, designed to bring more small business owners into the world of hiring workers they don't know and will never meet. Here's how it works: hiring managers place some of the funds for a job into escrow accounts, from which Elance pays contractors when work is delivered or time milestones are met.
Elance offers a variety of tools to make the entire process--from hiring to project completion--run smoothly for all parties involved. There's a time-tracker widget for contractors that automatically feeds data into the project page and the invoicing system, a skills testing program that lets contractors get certified for particular types of work, and free voice and chat communication support for hiring managers and contractors. (People are able to place anonymous calls even to contractors they haven't yet hired, if they want to talk with them first.)
The business is certainly sound. Elance takes a cut of all contractor payouts (4 percent to 6 percent depending on the volume of business the hiring party is doing on the site). That's a small overhead to pay given the reticence businesses have now to hire new staff. Elance is about more than just that, of course, but in this economy, that's probably enough to get the attention of a whole troupe of users.