However, this approach also has some drawbacks.
That’s why it’s essential to know about virtual team advantages and disadvantages to decide whether to turn your business virtual or not.
In this article, we’ll give you an overview of the advantages and disadvantages of virtual teams, with a handy table summarizing it. Then, we’ll explore the eight advantages and six disadvantages of virtual teams in more detail, with solutions for each con.
This Article Contains:
(Click on the links to jump to a specific section)
- Virtual Team Advantages and Disadvantages: An Overview
- 8 Key Advantages of Virtual Teams
- 6 Major Disadvantages of Virtual Teams (with Solutions)
Let’s get started.
Virtual Team Advantages and Disadvantages: An Overview
A virtual team includes employees working remotely while spread across different locations. These may be within the same city or in different time zones and countries.
Virtual teams are especially suited for the finance, IT, software development, and accounting industries.
If your company mainly uses technology to conduct operations, you can benefit from a virtual team — their primary communication takes place via online tools like Slack.
Read all about how remote teams function.
Now there are various types of virtual teams, such as:
- Product development teams: All members come together to develop a specific product/service.
- Service teams: Customer support teams, usually available across different time zones to provide 24/7 service.
- Offshore teams: Often a staple in software development companies, specific tasks are sent to another country to save costs.
- Networked teams: These functional teams are often geographically dispersed, and members may belong to different organizations. But they all come together to work on specific objectives.
- Parallel teams: Specialized professionals from inside/outside the organization, different locations, and diverse functional areas give recommendations in parallel with their primary responsibilities.
However, these teams won’t be suitable if your organization deals with manufacturing, testing, or other manual work.
Advantages and Disadvantages of Virtual Teams: A Quick Summary
Here’s a summary of the benefits and challenges of virtual teams:
Let’s explore each in more detail.
8 Key Advantages of Virtual Teams
When you shift to remote work, you can experience the following eight benefits of virtual teams.
1. Cost Savings
With a traditional setup, your company has to shell out thousands of dollars annually on office space and maintenance costs.
However, by switching to a remote work setup, you can reduce these drastically.
For instance, you no longer need to pay:
- Rent and utilities.
- Food and cafeteria expenses during work hours.
- Regular cleaning services.
- Real estate taxes (if applicable).
Another important factor to consider is pandemic-related workplace requirements.
If your team works remotely, you don’t have to provide PPE (personal protective equipment), sanitation supplies, or even change your workplace layout to make your office safe for returning employees.
According to Global Workplace Analytics, employers can save almost $11,000 annually per half-time virtual employee.
Since you’re no longer worrying about maintaining a physical office, you’re able to focus on scaling up your organization with this additional capital.
While there are some obvious benefits for you as an employer, your employees can also experience significant savings. The above survey showed that remote employees could save anywhere between $600 to $6000 annually by cutting expenses, such as commuting costs.
2. Increased Productivity
A recent PWC study found that 34% of employees feel more productive now than before the pandemic since they work from home, and over half of executives (52%) agree.
There are multiple reasons for this.
For one thing, employees tend to have fewer distractions at home. No office chats are distracting them from their task or coworkers dropping by their desks.
As a result, they’re able to give their undivided attention to any given task and work more compared to in-office.
Remote working can also be linked to flexible work schedules that let employees work around important personal tasks, such as doctor appointments, without needing an entire day off.
Remote employees can start work when best for them, take regular breaks and create their own schedule. Taking breaks, in itself, can help improve productivity.
3. No Unnecessary Meetings
Frequent face-to-face meetings are common time-wasters. By eliminating these, you’ll decrease distractions and increase your team’s overall productivity.
As a team leader, you can avoid unnecessary meetings by moving your operations online.
It’s tough to get everyone together for a meeting when your team members are working remotely, especially across different time zones.
So, you end up relying on communication technology such as emails, and social media tools like Whatsapp, Telegram, etc., for minor updates. You tend to save team meetings for important announcements and schedule them well in advance.
Doing so will help you understand which topics require virtual team meetings and which can be an email instead.
4. Healthy Work-Life Balance
Did you know that 64% of employees would choose a permanent work-from-home option over a $30,000 raise?
With remote work, employees have more time for their loved ones and experience less stress.
For instance, the average American work commute is 27 minutes/day. That’s 225 hours/year, or over nine whole days! Instead, remote workers get to save this time and spend it how they wish.
Similarly, the morning and evening commute can be a significant source of stress.
Removing it can help your employees feel more at ease. They can wear comfortable clothes, sleep in, and work at their own pace.
All these factors significantly improve your employees’ quality of life and their work-life balance.
While this may seem like a benefit for employees rather than employers, your employees’ state of mind directly correlates to their productivity and commitment to the company.
5. Improved Employee Retention Rates
In a virtual workplace, employers don’t have to worry about relocation costs.
If an existing employee has to move, they can continue working with your company without missing a beat. As a result, companies can retain valued employees and not stress over hiring replacements every time an employee relocates.
The data supports this, as companies that allow remote working notice a 25% lower turnover rate.
Additionally, virtual work and its flexibility can be a strong selling point for new hires.
6. Bigger Talent Pool
Traditional teams often have to rely on local talent, but a virtual organization can access candidates with diverse backgrounds, skill sets, and knowledge bases from across the globe.
Since you don’t have to worry about relocation costs, you can hire this global talent at a reduced price.
Many sites such as Upwork and Fiverr allow you to hire individuals or small businesses on a freelance or full-time basis.
As a result, you can have a global team and leverage their cultural differences (e.g., different native languages, expertise in specialized fields, etc.) to expand operations into a different country.
Telecommuting (remote working) also evens the playing field for people with disabilities and mental health concerns. These people usually have a home office setup to help them thrive during work while also providing the required self-care.
Having diverse voices in your remote team can open your eyes to new product developments, inclusive policies, and novel hiring practices.
7. Faster Time to Market
If you have a global virtual team spread across various time zones, someone is always awake and working. For instance, a developer in India can take over once the American developer finishes their work.
Such constant collaboration and teamwork will increase your company’s productivity. You’ll be able to release a new product into the market sooner and stay ahead of the competition.
When this happens, you can expand your business hours, increase your reach, and cater to more clients.
8. Reduced Carbon Footprint
According to the EPA (The Environmental Protection Agency), transportation accounts for 29% of all greenhouse gas emissions in the US.
Switching over to remote work will instantly reduce employee commute, leading to a reduction in greenhouse gas emissions.
Work from home also reduces your overhead costs. Since employees aren’t in the office, you use less electricity, water, and heating and cooling facilities.
All of this contributes to a carbon footprint reduction – as a company and as individuals.
Why is this important?
Millennials and Gen-Z make up the majority of the current and incoming workforce. These generations place a lot of emphasis on an organization’s ESG (environmental, social, and governance) issues.
Mercer found that companies with high employee satisfaction ratings also had significantly higher ESG scores.
So, it’s important to take a firm and actionable stance to attract the right talent.
6 Major Disadvantages of Virtual Teams (with Solutions)
While there are many advantages of virtual teams, there are also some disadvantages.
Here, we’ll explore the six possible downsides of virtual teams and how you can mitigate them.
1. Lack of Trust
When you and your employees can’t see each other, it may create a lack of trust.
You may become tempted to micromanage as a way of keeping an eye out.
However, this can disengage employees and cause frustration on both ends, which is why it’s crucial to establish trust from the get-go.
Solution: Create concrete goals for each worker and define their role in your company. Be upfront about what you expect them to do and maintain a constant dialogue.
2. Reduced Team Collaboration
A virtual team can feel very impersonal – everyone does their own thing, at their own time.
It isn’t easy to get everyone together to collaborate on a project. Similarly, if members are in different geographic locations, a time difference may hinder their progress.
Additionally, virtual communication, especially over text, can be easily misinterpreted. It can lead to misunderstandings that make effective collaboration a challenge.
Solution: There are many video conferencing tools you can use to encourage virtual team communication. You can also use collaborative workspaces, such as Google Workspace tools, to make your online collaboration more transparent.
3. Social Isolation
A flexible virtual environment can be highly beneficial for work-life balance, but it can also be very isolating.
Virtual workers may often feel like they’re the only ones struggling with a specific task and may not know who or how to ask for help.
Team building can also be difficult as there’s a loss of the water cooler effect, where employees hang around the water cooler, chatting about non-work topics.
Solution: There are many ways to lessen the impact of social isolation.
For instance, you can create a specific meeting room where employees can chat about whatever’s on their minds. You can also create a separate “water cooler” Slack channel to encourage casual conversation.
You can introduce a virtual team building exercise like a weekly happy hour or engage everyone in a team building activity like an online escape room.
4. Hidden Technological Costs
For effective virtual team management, all employees need to have updated software, be familiar with various communication channels, and adapt to new technologies quickly.
However, it’s impractical to expect every existing and new employee to possess all the necessary apps and tools. As such, you’ll probably have to provide them.
It may not seem like much when it’s just one tool, but the costs can rack up when you consider the multiple tools, apps, and integrations cross functional teams need.
Solution: If you’re a smaller company or a startup, you can opt for the free options till your virtual team grows.
Additionally, you can specify certain hardware and software requirements in your job description. Doing this will instantly eliminate candidates not meeting these requirements.
5. Potential Security Risks
The more people can access your confidential trade secrets, the more they’re vulnerable.
While most companies have data protection in their employee contracts, you may still fall victim to a malware attack.
Some employees may also download company documents but not take necessary precautions. Here, even if one virtual project team member’s device gets hacked, all your information is in danger.
Solution: Implementing a robust BYOD (Bring Your Own Device) policy is the most straightforward answer. It can outline what your IT department and employees should do in the event of a data breach.
This will safeguard all your and your employees’ information and educate them about safe online behavior.
6. Can Be Tough to Track Progress
If you make the switch to a virtual team, you’ll probably initially struggle with tracking your team’s progress. You can’t go around to their desk or keep asking for updates daily.
Solution: You can schedule regular virtual check-ins with your project team to ensure everything is going smoothly. Use these virtual meetings to clear up any obstacles in their path and provide feedback.
Another option is to use an employee productivity management tool like Time Doctor.
Trusted by small as well as big businesses alike, Time Doctor can help you track your team’s project and task completion.
Through Time Doctor, you’ll also be able to:
- Calculate total hours worked by each employee.
- Check which virtual team member is present, absent, late, or partially late.
- Visualize their progress through real-time productivity reports.
- Use distraction alerts to help employees focus on tasks.
- Manage payroll for all employees.
All this data can help you stay aware of your employee’s working hours and how they utilize that time.
Virtual teams can be immensely successful for the employer and their employees. They can help you cut back costs, branch into new markets, and become a global enterprise.
However, these remote teams also have their challenges.
Your company can overcome them by building trust, ensuring constant communication, and providing employees the flexibility to manage their time. In return, employees will respond with increased productivity, better time management, and loyalty.
When done right, your virtual team will help you soar to new heights.
Liam Martin is the co-founder of Time Doctor—one of the world’s leading time tracking software for remote teams. He is also the co-organizer of Running Remote, the world’s largest remote work conference.