How can virtual organization reduce costs

Virtual team is an emerging new-age trend with followers across business sectors. Just like any other new trend, virtual team also has to undergo strict scrutiny of researchers to weigh its advantages and disadvantages before being accepted by the professionals. The advantages and disadvantages of virtual teams can be looked upon from three levels - individual, organizational and societal as a whole. This article summarizes different perspectives on the advantages and disadvantages of the virtual team and serves as ready reference guide to our readers.

Cost savings - The biggest advantage of virtual team enjoyed by an organization is the associated cost savings. The organization can do away with huge expenses on real estate, office spaces, utilities bills such as gas, electricity, water etc. Many organizations outsource their operations to the low-cost regions.

Thus production cost also decreases with the reduced raw material cost, operational costs and lower wages of the employees in these geographic locations.

Leverage Global Talent - Virtual Teams allows organizations to look for talent beyond their country of origin. This brings together the experts and specialists from across the globe to work together on the project.

There is no shared office space where the company meets to conduct business. An example of a virtual organization is a freelance writing company that has authors contributing content from all over the world.

A virtual organization can save money on overhead expenses, but there are keys to managing a virtual organization that business owners should be aware of. Virtual organizations need to communicate extensively through email, Internet chat and telephone. But to manage a virtual group effectively, you need to have rules for communication. Emailing everyone in the entire organization each time you need to send a message can cause a clutter of emails that will take too much time to go through.

Use a company Internet message board to post messages back and forth. People can view the board on their own time and it does not take up space in the email inbox. Email and Internet chat does not allow for the emotion, facial expressions and body language that help to get meaning across in a meeting.

Set up a video teleconference system for meetings or, at the least, use telephone conferencing to avoid misinterpretation of information. One of the key differences between virtual organizations and standard organizations is that virtual organizations do not offer the opportunity for contact with co-workers. Dec 12, Organizational Design , Virtual Organizations.

Today virtual organizational design is all of the rage. Every day more companies including Fortune companies are more readily integrating virtual teams into their organizational design and hiring processes. The benefits are quite attractive. However, for smaller companies and startups, making the decision to hire a remote workforce is a big one.

Often, it is done with the advantages in mind, but without looking deeply enough into the disadvantages and issues that can arise from that decision. Making the right decision for your company, based on your own goals and hopes, is critical. Making the wrong decision could set your startup back years or limit your growth for years to come. These advantages include:. The benefits of remote and virtual teams are numerous.

However, many teams hone in on these benefits without addressing the downsides of choosing a virtual organization design. To offset the benefits of hiring remotely, there are some serious disadvantages. Often, startups that opt for a virtual organizational design without being fully informed find out about these disadvantages the hard way.

Difficulties Installing a Company Culture. Remote teams often have problems fostering cohesiveness among the team. Remote teams often choose their own work hours, which can lead to a fragmented company culture. Once that culture is in place, it can be difficult to make the changes required to get things back on track. Ensuring that you understand how the disadvantages of virtual hiring can offset some of the advantages is critical for making the right decision for your startup.

For startups, the decision of whether to focus on hiring for a traditional office setting or virtual teams is an important one. Having a complete understanding of the advantages and disadvantages of virtual organization design can help you to make a choice that puts your startup in a position for success.