Create exchange mailbox fails when using direct connector installed on a non domain controller machine

IQservice uses commandlet to manage mailbox's on exchange server. The context of the shell used for this is the same as the logon account for the IQservice itself.
By default the IQservice runs under the context of the local system when started as a windows service. Change the log-on type context of this service to a user with exchange admin privileges to resolve this issue.