Risk differences in virtual and co-located teams


Advances in information and communication technologies have created tremendous opportunities for organizations across the globe to outsource more economical and high efficiency individuals and teams to operate. This facility has introduced a new term into the organizational structures i.e. the virtual teams. Virtual team refers to a group of people working in collaboration towards the achievement of a common goal. The characteristic that makes virtual teams distinct from other teams is that these teams are not co-located in the sense that they don’t have any face-to-face interaction. Geographically, the members of virtual team may be from different cities, different provinces, different states or even different countries and subcontinents. Decisions of outsourcing are made based upon several factors like; the required expertise are not available in the region, the required expertise are very expensive if hired from the current geographical location of the organization, or the required skills and expertise are more easily available and/or more economical to be outsourced.

Where outsourcing has helped businesses to find the best expertise they require in order to efficiently, and effectively complete their projects, the complexities involved in managing virtual teams have made the outsourcing decisions very complicated. Organizations have to make diligent strategies and well-informed decisions while outsourcing and deploying virtual teams in their projects.

This report based on secondary research sources spans over four parts. The first part introduces virtual teams and identifies some basic differences between virtual and co-located teams. The second part briefly describes the challenges and dynamics of deploying virtual teams with specific reference to project management. In the third part of the report, research efforts specifically focused on identifying risks associated with projects involving virtual teams are reviewed. And the final part concludes the report..

Literature Review

Research literature comes up with varied definitions of the term virtual teams. Some researchers base the definition of virtual teams on geographical disperse while others relate it to the means of communication. Yet some other further dig into the degree of virtuality based on various factors thus defining more and less virtual teams. Gibson, C. B., & Cohen, S. G. (2003) emphasize the presence of at least the following attributes in teams to be considered as virtual:

  1. A group of individuals working on independent tasks, but sharing responsibility for the final outcomes.
  2. They are viewed by others as well as by themselves as a complete social unit, entrenched in one or more social systems, collectively managing their relationships across organizational boundaries.
  • The members of the team are geographically dispersed and not collocated
  1. The members of the team rely on technology-mediated infrastructures for communications in order accomplish their tasks.

This definition clarifies that virtual team members work from geographically dispersed locations which introduces global, multicultural, multilingual and multi-organizational aspects of virtual teams. Team members primarily rely on different forms of electronic communications to interact. As the teams may meet face-to-face, yet it is not a regular norm. The variety in extent and level of sophistication as well as number of members who rely on the electronic communications, define the degree of virtuality in virtual teams. The attributes of virtuality of teams as described by Gibson, C. B., & Cohen, S. G. (2003) clearly bifurcate between co-located and virtual teams.

Dynamics and Challenges in virtual project teams

Virtual teams offer unparalleled levels of flexibility and responsiveness (Powell, Piccoli, & Ives, 2004). The virtuality of these teams provides penetrable interfaces and boundaries, which make them, highly adaptive to varying requirements and circumstances (Jarvenpaa & Leidner, 1999).  The use of advanced communication and information technologies enable virtual teams to surpass the time and space limitations and provide the organizations an opportunity to form a team with highly specialized complementary skills and competencies across geographic borders. The geographical dispersion of virtual teams in combination with their all-embracing use of information and communication technologies, not only bring rich diversity in terms of skills but also badges virtual teams to exploit asynchronous workflows and manage concurrency to encounter the 24/7 throughput loads of the global economy.

With the advancements in communication and information technologies and hence more reliance on virtual teams in volumes of projects with more complexity, brings into front the “dark side” and challenges associated with them (Jarvenpaa & Leidner, 1999). Complexity of projects and degree of virtuality adopted by organizations make them face different and complex work contexts (T. R. Kayworth & Leidner, 2001).

The virtual team’s high dependency on technology affects team dynamics and introduces complications with progressive management. As an upshot, virtual teams face a range of issues including socialization, leadership, communications, cultural diversity, coordination, and technical issues. Organizations must realize the awaiting challenges, social subtleties, problems, and prospects associated with virtual teams and diligently devise strategies to cope these challenges, minimize the problems, and maximize the benefits (Hiltz & Turoff 1985). The multi-organizational, multicultural, and transnational diversities along with geographical disperse, and different way of interaction associated with virtual teams bring different risks associated with virtual teams than traditional co-located teams.  Next section reviews research findings with specific focus on risks associated with virtual project teams.

Risk differences between virtual and co-located teams

Research on risks associated with traditional projects undertaken by co-located teams is quite abundant. However, there is a dearth of productive research on the risks associated specifically undertaken in virtual environments involving virtual teams. Afaq et al. (2014) conducted a research survey involving one hundred and seven (107) practitioners of virtual projects i.e. deploying virtual teams for the purpose of shortlisting major risk factors linked with virtual teams. They identified the following three (3) issues as the major risk factors having significant negative impact on performance of virtual project teams:

  1. Inadequate Communication Among Team Members

Inadequate communication may be an indicator of lack of understanding of communication tools, presence of some conflicts among team members lack of understanding among team members, comfort with using communication tools. This causes lack of understanding of the project requirements, can result in missing deadlines, and low efficiency and performance due to less team cohesiveness and feeling of comfort working within team. However further research is required to dig well into the issues to justify the root causes of inadequate communications.



  1. Project is critical to the organization

This risk factor was also identified as the major risk factor for the performance outcomes of the project team members, however, this particular research is unable to clearly elaborate as how virtual teams’ performance can negatively associated with the criticality of the project to the organization.


  • Integration of Components is Complex

Another risk factor of higher significance identified by this research is the complexity associated with integration of components in a virtual environment. Integration issues are more easily  covered in case of face-to-face interactions and are the hardest with virtual teams.

Reed, A. H., & Knight, L. V. (2010) also identified seven (7) major risk factors having significantly high impact associated with the virtual project teams as compared to its impact on co-located teams.

  1. Insufficient Knowledge Transfer

This risk factor was ranked to have the most significant negative impact on virtual project teams’ performance as compared to impact on performance of co-located teams. This risk can be justified by the fact that virtual teams lack frequent face-to-face conversational meetings. Most of communications are mediated through electronic means, which are not conversational.




  1. Lack of Team Cohesion

This is another significant risk factor associated more with virtual teams. Co-located teams are easy to form bonds than virtual teams who are solely dependent upon electronic media for developing cohesion.

  • Cultural & Language Differences

Virtual teams incorporate more cultural and language diversities. Cultural differences offer more risk as compared to language differences in virtual teams. Cultural differences are hard to detect and are directly related to team members’ behaviors towards conflicts, deadlines, and timeliness. Individuals belonging to different cultures understand the same concepts in different ways.

  1. Inadequate Technical Resources

Virtual teams are majorly dependent upon electronic communication and thus their communication needs contribute more to this risk factor. In addition, virtual teams in most of the cases are geographically more distributed, where the requirement of technical resources is more than that of co-located teams making it a challenge. In addition, a competition for technical resources is complicated and challenging in virtual teams compared to co-located teams

  1. Team Inexperience

Team inexperience is another risk factor for virtual team projects. Virtual teams normally comprise members outsourced from outside who are not familiar with the company’s processes and procedures. Even if working at different sites of the same company, virtual team members are not as aware of the company processes as a member in the co-located team can be. This causes problems in mismatching of processes followed and thus a wasted time.

  1. Team Members’ Loss

Loss of a team member offers more risk of failure for virtual teams compared to co-located teams. The reason can be the fact that virtual teams are free of geographical barriers and often incorporate best of the best. Loss of someone who is a superstar in his area is hard to overcome by any new induction. Team members’ more interdependence in virtual teams is another factor that makes this factor more significant compared to co-located teams.

  • Team Members’ Hidden Agenda

A virtual team member with hidden agenda would have more impact on the project as compared to a co-located team member. This is because hidden agendas are easy to mask on virtual teams while more face-to-face verbal communications in co-located teams make it difficult to hide secret agendas.


The research report concludes that virtual project teams on one hand present the benefit, which can neither be denied nor ignored. Offering a diversity of complementary skills, expertise, and competencies, these virtual teams can boost the revenues of an organization to untouchable heights. However, research into the dynamics of virtual teams shows that nature of these teams, the nature of the virtual projects, and the very different characteristics of virtual teams in addition to unprecedented benefits, bring with them, hard challenges.

The distributed nature of such teams and the major reliance on electronically mediated communications, make virtual projects and virtual teams’ management a giant challenge. These characteristics make the knowledge transfer and management, the integration and cohesiveness of team skills, the communication accuracy and compatibility, conflict identification, management and resolution, and many more associated factors of critical importance to consider and analyze and come up with diligent decisions and well-thought strategies in order to reap the full benefits of the use of virtual teams.

The report also finds that many research findings in this area are still vague and need further investigations in order to inform the project management teams to device the best monitoring and control strategies for virtual teams to achieve desired results on the virtual projects undertaken.




Afaq, S., Qadri, S., Ahmad, S., Siddique, A. B., Baloch, M. P., & Ayoub, A. (2014). Software risk management and virtual team environment. International Journal of Scientific & Technology Research3(12), 270-274. Retrieved from www.ijstr.org

Gibson, C. B., & Cohen, S. G. (Eds.). (2003). Virtual teams that work: Creating conditions for virtual team effectiveness. John Wiley & Sons.

Hiltz, S. R., & Turoff, M. (1985). Structuring computer-mediated communication systems to avoid information overload. Communications of the ACM28(7), 680-689.

Jarvenpaa, S. L., & Leidner, D. E. (1999). Communication and trust in global virtual teams. Organization Science, 10(6, Special Issue: Communication Processes for Virtual Organizations), 791-81

Kayworth, T. R., & Leidner, D. E. (2002). Leadership effectiveness in global virtual teams. Journal of Management Information Systems18(3), 7-40.

Powell, A., Piccoli, G., & Ives, B. (2004). Virtual teams: a review of current literature and directions for future research. ACM Sigmis Database35(1), 6-36.

Reed, A. H., & Knight, L. V. (2010). Project risk differences between virtual and co-located teams. Journal of computer information systems51(1), 19.