Opportunities and challenges of virtual organizations

Maintaining work-life balance is a serious challenge today for professionals in almost every sphere of organizational activities. The organizations are considering this issue on a priority basis as it is supposed to reduce attrition remarkably. A common move that most organizations have recently made in this direction is to allow greater flexibility at workplace. A large number of companies especially in the IT sector offer their employees the facility to work from home. Employees are recruited around the globe and are put across different work areas in the organization without the need to be physically present at workplace. This has created what is called the ‘virtual organizations.’ However, it is not only about maintaining work-life balance that has given birth to virtual organizations; the unique challenges that today’s businesses face also created the need for virtual workplaces. Organizations today need a diverse team of professionals who can come up with expert solutions to these unique business problems. Such kind of professionals can be better recruited by removing the geographical constraints. Hence, the organizations are increasingly developing virtual teams where team members are scattered across various geographies and rarely meet, yet work towards achieving a common objective. But virtual teams have their own opportunities and challenges just like the traditional ones.

Opportunities for Virtual Organizations

The virtual teams offer the organizations an opportunity to hire the best available talent from every corner of the world. Multi-cultural teams are also supposed to cater to global clients in a better way as they can understand their demands easily. Since, the employees can work in their comfort zone, this acts as a mutual benefit for both the organization as well as employees. The work timings are rarely defined under virtual set-ups and all these factors enhance the availability of female workforce that is often found missing in the traditional teams. Researches show females can prove to be better leaders and create a more harmonious work environment (Zenger Folkman Inc, 2011 cited in HBR, 2012). Also, it is proved that companies do better corporate social responsibility when there are a higher proportion of females in the workforce (India CSR, 2011). So, virtual organizations avail these benefits apart from an opportunity for global knowledge transfer and learning for its members. The organizations can save a lot on office infrastructure as there is absolutely no need for a huge office space. Apart from infrastructure, the companies also save on reimbursing any commuting expenses to their employees.

Challenges for Virtual Organizations

The members of virtual teams hardly get an opportunity to meet each other in person. This often results into a lack of empathy and understanding among the team members. Virtual teams often lack an emotional bonding among the team members, between team and the leader, and with the organization. There is a greater risk of communication flaws in virtual organizations and thus the blame game is quite obvious. If the roles are not properly defined, there is chaos and confusion leading to conflicts and project delays. Effective supervision is also a challenge in case of virtual teams if the work is not delegated properly. The virtual organizations also face problems relating to training and development of their employees not because they cannot arrange it online but it is sometimes hard to recognize their training needs.

The growing demand for flexible workplaces will put even more pressure on virtual organizations to overcome these challenges and make the best use of the available opportunities. The need of the hour is to work upon the communication flow in the virtual organization and ensure that everybody in the organization knows his role well and there is no overlapping of responsibilities. The duties have been delegated well and everybody has a say in the organization. Apart from this, some online discussion forum to acknowledge employees’ feedback and grievances must be in place.


  • India CSR News (November 22, 2011). “More women leaders, means higher levels of Corporate Social Responsibility.” Retrieved from: http://www.indiacsr.in/en/?p=3491
  • Zenger, J. & Folkman, J. (March 15, 2012). “Are Women Better Leaders than Men?” Retrieved from: http://blogs.hbr.org/cs/2012/03/a_study_in_leadership_women_do.html

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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