Virtual Teams: Types, Management, and Advantages

July 7, 2023
|By Gretel Digo

Virtual teams are defined by various boundaries, including time, space (geography), organization, culture, the number of team members, and the level of interaction among them. These boundaries play a crucial role in determining the type of virtual team and the required management approach.

Common Types of Virtual Teams

According to Duarte and Snyder’s study Mastering Virtual Teams: Strategies, Tools, and Techniques that Succeed, there are six types of virtual teams:

#1. Networked Teams

The term “networked” refers to the linkages between members of virtual team that are geographically dispersed. The members may or may not originate from a single organization. The distinguishing characteristic of a virtual team is its ad hoc nature; organizations often build and dissolve networked teams as necessary.

Companies usually create networked teams to source and pool ideas from different experts and address a current or ongoing issue. The life cycle of a networked team depends on the speed of issue resolution, and the number of people on the team depends on the complexity of the issue. Consulting firms often have networked virtual teams that pool expertise and dispense advice to clients. For example, if a single virtual team cannot provide management best practices that a client requires, the firm can rely on other networked teams for inputs.

#2. Parallel Teams

Parallel teams are similar to networked teams in that organizations pool together a group of experts to bear on a specific issue or problem. The members of a parallel team may come from within the company or from outside in multiple geographical locations. Parallel teams are often created for short-term durations. However, parallel teams may be retained after the project is completed.

An example of a virtual parallel team is the one employed by a consumer goods company to source ideas for an international customer loyalty system. Majority of the work performed by the parallel team involved data collection and analysis.

#3. Project Development Teams

Project development teams are virtual teams tasked to work on a specific project. Organizations usually build project development teams to create new products, services, or processes for internal use and for end users. Project development teams are often geographically dispersed across different time zones.

Unlike parallel teams, project development teams have greater decision-making capabilities. Members may be added or removed during the duration of the project as required. Project development teams also exist for longer durations. This type of virtual teams is common in the IT industry, where the common goal of the team is to produce an application or service.

#4. Work, Production or Functional Teams

Production virtual teams are characterized by their limited, task-specific roles. These teams work in different departments within the company and may operate from multiple geographic locations. An example is a virtual team responsible for day-to-day, ongoing tasks such as a warehousing team in the Philippines and an accounting team located in India. 

#5. Service Teams

While work or production teams are responsible for routine, ongoing tasks, service teams are assigned to perform a particular service. Service teams generally work in shifts; as one team’s shift ends, another team in a different time zone picks up where the first team left off. In this way, the service can be performed round the clock. An example of a service team is customer service and technical support. Many Fortune 500 companies have captive centers all over the world staffed by local service teams to assist customers 24/7.

#6. Offshore ISD Teams

Offshore ISD teams are teams hired by an organization to perform parts of the company’s often mission-critical activities. These teams work with an onshore team on projects like software development and research and development. They are common across industries, particularly in the IT and high-tech sectors.

Outsourced Team Management

Kayworth and Leidner’s Leadership Effectiveness in Global Virtual Teams describes five stages of the virtual team management process: preparations, launch, performance management, team development, and disbanding.

Virtual Team Management Preparations

The first stage of virtual team management is the identification of the team’s common goals and appropriate processes to achieve these goals. Goals and process execution are determined by strategic factors such as the need to reduce costs, current organizational structure, flexibility, and market needs. During the preparations phase, the people involved develop a mission statement, design processes, select talent, design a rewards system, select required technology and integrate the virtual team with the parent organization.

Launch Stage

During the launch stage, all members of the team get to know each other (preferably in person but may also be done through video conferences or other means of communication). The management may hold an introductory workshop to instruct members about common goals, teamwork rules, roles and responsibilities, effective communication techniques, and use of technology. Workshops are designed to establish a common culture among virtual team members, build trust and promote team identification.

Outsourced Team Performance Management

The next stage after launch activities is performance management. Performance is monitored and evaluated throughout the duration of the project to promote a positive team climate and maintain a high level of work efficiency. Performance management aims to address leadership, worker motivation, communication and knowledge management issues.

Communication between members and virtual teams are usually done via electronic means, which may diminish the quality of information exchange. Motivation, trust, cohesion and satisfaction vary significantly among individual team members, and can be improved through various activities. Knowledge management issues can arise from lack of face-to-face communication between virtual team members and must be addressed through efficient performance management.

Team Development

Team development and training is a stage of performance management that includes activities addressing the needs of the team and individual members. Managers identify needs and deficits, conduct training and evaluate the effects of training.

Disbanding

The last stage of virtual team management is disbanding. Depending on the type of team and duration of the project, interventions can be introduced to maintain motivation and assist members going through the transition process.

Virtual Team Advantages

A common assumption about virtual teams is that work performance suffers because of time, geographical, cultural and organizational dispersion. However, virtual teams can actually outperform traditional teams IF managed properly. A study of 80 software development teams with members located around the world showed that virtual teams can perform more efficiently than co-located groups when managed well. Here are some reasons virtual teams can drive efficiency and lead to better results:

Global Talent Sourcing

Organizations that have difficulty sourcing talent locally can enlist the most talented professionals by recruiting elsewhere. Near-shore and offshore professionals can augment a virtual team’s capability on an as needed basis or for the long-term. Even if there is a sufficient supply of local talent, organizations can leverage the diversity of ideas and cultural diversity that offshore team members bring to the table.

“Follow the Sun” Schedule

Virtual teams can work 24/7 using a “follow the sun” approach. For example, as programmers in North America end their day, virtual team members in the Philippines can continue the work and resolve problems.

Reduced Time to Market

With a 24/7 schedule, virtual teams can significantly reduce time-to-market, particularly in the manufacturing industry where lead time is one of the top keys to success.

Improved Creativity

Organizations can benefit from the different backgrounds of their virtual team members. Diversity encourages creativity and promotes contrasting viewpoints, which opens up unexplored solutions for consideration. Diversity also promotes workplace equality and inclusiveness, extending career opportunities to disadvantaged individuals who may be unable to work in a traditional office.

Reduced Operating Costs

Virtual teams save companies from significant overhead and travel expenses. Instead of establishing offices in multiple global locations, an organization can build a virtual team that serves as an extension of the in-house staff. Virtual team members do not have to commute to and from work, leading to efficiencies that can translate into more savings for the business.

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