Virtual Teams: The Definitive Outsourcing Guide

A virtual team is a group of people working together outside geographical or organizational boundaries. A virtual team is also called a geographically dispersed team or an outsourced team, in the context of an organization hiring outside experts typically located offshore to perform specialized tasks. Virtual team outsourcing involves staff members that are usually located across time zones. Through the use of information and communications technology, team members work interdependently to achieve a common goal. 

A virtual team may be assembled on an ad hoc basis or for a long-term, strategic purpose. Members of a virtual team can work temporarily for the organization or become permanent extensions of the company’s local staff. Virtual team members may work from home, on-site in a service provider’s office or an organization’s local office. It is common for members of a virtual team to never meet personally; instead, daily communication is conducted online, by telephone or other electronic means. 

Virtual teams allow organizations to match talent to role easily, particularly when there is a local shortage of skilled labor. Virtual teams offer a viable solution to issues related to cost pressures, market cycles, globalization, corporate restructuring, and employee mobility. Increasingly, organizations are using virtual teams to leverage specialized skills required to perform complex, mission-critical knowledge work.

Outsourced Team

Outsourcing has been around for many years, but outsourced services and virtual teams really took off with the rise of the internet and advent of advanced forms of communication. In North America, outsourced software development teams started appearing in the 1990s, with companies outsourcing work to onsite teams and offshore (mainly to India). Other industries closely followed suit in an effort to access specialized talent and the latest technology while achieving cost efficiencies.

The hiring of offshore virtual teams has become popular in recent years mainly due to cost advantages and better access to hard-to-find skilled labor. Service providers in these offshore locations hire and recruit virtual team members and match them to client needs. The offshore teams often work with an onshore team on similar or completely different tasks.

Virtual Team Outsourcing: Model and Structure

A virtual team is composed of people, purpose (a common goal) and connections. Because virtual teams are distinct from an organization, the team lacks characteristics such as hierarchy. Instead, the common goal and links between members hold the team together. The goal can be broken down into a series of steps and processes assigned to individual team members. The tasks performed by each member vary, as well as the results. However, each activity contributes to the overall purpose of the virtual team.

Powell’s life cycle model (Journal section of Business Perspectives) for virtual teams has three categories: inputs, processes and outputs. Inputs such as design, culture, technical expertise and training (leadership, goals, technology and communications in other models), are attributes that the team uses to begin its work. Inputs also impact effective communication and the development of a shared understanding between members. Design refers to the structure of the team’s interactions, culture is the individual differences stemming from geographical location and other boundaries, and technical expertise is the skills and expertise contributed by members of the team. Training or education impacts team performance.


A virtual team’s design is the structure of its interactions. Interactions encompass all of the team’s exchanges with each other and the expression of the team’s goals, values, norms and activities. Interaction may be face-to-face or through phone, the internet, and other electronic media. A team’s design can have a profound impact on the development of a shared language between members.


Cultural differences can hinder team harmony and create communication barriers. This is why some companies prefer to hire virtual team members whose culture is highly compatible with that of the onsite team. However, even slight differences among team members located within the same country can have a negative influence on virtual team collaboration and coordination.

Technical Expertise

Virtual team members are often hired because of their technical domain expertise. Lack of demonstrated expertise and poor handling of technical issues can negatively impact team performance as well as individual satisfaction. 


Similarly, inadequately trained virtual team members may lower the overall performance of the team. On the other hand, different technology skills among members can lead to inconsistency.

Tasks Processes of a Remote Team

While inputs are attributes essential to initiate interactions, processes are ongoing actions between virtual team members. These actions are interdependent and transform inputs into outputs. The virtual team process category has two aspects: socio-emotional and task. The socio-emotional aspect includes relations, cohesion and trust, while the task aspect includes communication, collaboration and task-technology fit.

Socio-Emotional Process

The socio-emotional process refers to the development or building of working relationships, cohesion and trust. Each member has to feel that he or she is a legitimate part of the group and his or her contribution help achieve the team’s common purpose. To be a functioning, interdependent unit, the team must have 1) friendly relationships between members, 2) a “third way” micro culture that supersedes individual cultural affinities, ideas, locations or functions, and 3) strong leadership abilities in each team member. The nature of virtual team work makes proactive, independent action essential to high performance and success.

Cohesion and trust are closely linked. Cohesion is the tendency of a team to remain united in the pursuit of a common goal. The primary factor that determines whether a team can be cohesive or not is the level of trust among members. Studies suggest that collaborative technologies may hinder cohesiveness in virtual teams and that virtual teams go from relatively low to a stronger degree of cohesion over time due to the absorption and exchange of social information. On a similar note, a high level of trust ensures that members communicate properly, participate actively in activities and complete assignments.

Task Process

Task processes include communication, collaboration and task-technology fit (or communication coordination and task-technology structure in other models). Communication is considered the heart of the virtual team process, without which geographically dispersed team members cannot work on their assigned tasks. Collaboration refers to the concerted effort between team members (or parts of an organization) and logical consistency of individual work activities. Task-technology fit represents the compatibility of technology with the assigned tasks. 

Virtual Team Outputs

The outputs or outcomes of a virtual team include everything created by the work processes. Outputs are measured at the organizational, team and individual level, such as performance, satisfaction, innovation, and decision quality of the team (as a single entity). Several studies have compared the performance and satisfaction of traditional vs. virtual teams. 

Performance and Satisfaction

The results of performance studies are mixed. One study (Sharda et al. 1998) showed that virtual teams performed better than traditional teams. Majority of research work did not find any significant difference between the two types of teams, however. 

A few studies also found no difference between the traditional and virtual teams in terms of satisfaction. One study found that a traditional team initially scored very high in satisfaction compared to a virtual team. However, the satisfaction of the virtual team increased over time and exceeded the traditional team’s level of satisfaction. In terms of individual members, those who experienced higher satisfaction with virtual teams were more likely to have had training and access to more means of communication.

Decision Quality and Innovation 

Similarly, majority of studies did not find a significant difference between the decision quality and number of ideas generated by virtual and traditional teams. One study (Chidambaram & Bostrom, 1993) showed that virtual teams produced more ideas compared to traditional teams. This phenomenon can be attributed to the nature of virtual work that requires more time for team members to reach a decision.

In their paper Office Technology and People, Anne Powell of the Southern Illinois University Edwardsville, Gabriele Piccoli of Cornell University and Blake Ives of the University of Houston mentioned several studies that enumerated the attributes of a successful virtual team. These attributes include training, strategy/goal setting, shared language development, communication, collaboration, commitment, cohesiveness and good task-technology fit. It’s easy to see why a virtual team lacking strategic direction, shared language, communication, unity, trust and the right technologies can be outperformed by a highly-effective and functional virtual team.

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