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Globalization and advancement in technology have altered the nature of project teamwork and methods through which it is handled. The team refers to a group of individuals with complementary skills and commitment to attain a common goal that holds them mutually accountable. According to Van den Bulte and Moenaert (1998), a co-located team is a type of team where its members share a common location during project execution. However, many organizations have projects spanning in different geographical locations within several countries, which involves great distances and different time zones. Virtual teamwork becomes more complicated to manage when compared to co-located teamwork due to the lack of familiarity and trust, shifts in work schedule, the difference in time zones, and difficulties in problem-solving. In this paper, I review five sources to determine the challenges and benefits that co-located teams face, solutions to the problems, and the reasons for the shift from co-located teams to virtual teams despite the advantages of the former.

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Benefits of Co-Located Team

Co-located team accelerates communication and improves workers’ reliability. Personal interactions between managers and employees enable team members to focus on the organization’s goals due to adequate supervision (Van den Bulte & Moenaert, 1998). According to Benefield (2008), co-location of teams ensured 89 percent collaboration, reduced time wastage by 68 percent, and improved the quality of work by 54 percent within 30 days. Co-location of team workers also ensures the unity of command, the unity of direction, and centralization. According to Reed and Knight (2010), co-located teams have less ambiguity and they are well structured. This is important, especially for the projects that require continuous communication. For instance, during agile software development, agile testing plays an important role in the software development and requires collaboration and communication among members (Eccles, Smith, Tanner, Van Belle, and van der Watt, 2010). According to Eccles et al. (2010), radical collocation resulted in the successful agile software development due to reduced communication difficulties in the distributed environment. Furthermore, Reed and Knight (2010) state that 28.40 percent of the virtual team members who participated in the study agreed that virtual team hinders the transfer of knowledge when compared to 14.89 percent of the respondents in co-located teams, which proves the advantages of co-location.

Co-located team streamlines product development. According to Reed and Knight (2010), 27.10 percent of the virtual team respondents and only 8.51 percent of the co-located participants confirmed that team’s inexperience had an adverse impact on the team’s success, which indicated that there is a significant difference in the risk of hidden agendas between virtual and co-located teams. During product development, sharing workplace enables team members to discuss and resolve their differences during each stage of the project to work commendably and productively. Moreover, the management ensures that work schedule is not altered and that the team remains focused. Unlike co-located teams, virtual teams may face delays due to the difference in time zones, dependence on power, and lack of adequate supervision. Open communication keeps the response loop tight, which results in swift bug resolutions. Van den Bulte and Moenaert (1998) provide an example of Neon Car Company that cuts development time using co-located team.

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Co-located team also lowers organizations operating costs. Teams spend less time during communication and reduce its cost (Reed & Knight, 2010). Sharing joint working station reduces the cost required for the installation of high-speed telephone lines, test drivers, video conferencing devices, stubs, and data centers. In addition, co-located team ensures team bonding. According to the Fayol’s principles of management, direct employee interaction plays a significant role in management. Consequently, co-located team improves trust and mutual respect among workers.

Challenges Facing Co-Located Teams

Despite the benefits of co-located team, assigning a task to employees becomes difficult to obtain all necessary talent and skills in one place. According to Van den Bulte and Moenaert (1998), the Boston Consulting Group states that co-located teams lead to reduced product development when compared to innovative virtual companies. Due to the distribution of talent in different geographical locations, there can be insufficient skills in a single location, which may result in the ineffectiveness of co-located team. According to Reed and Knight (2010), there existed a significant difference in a p-value of less than 0.03 when comparing virtual teams. Furthermore, 55.32 percent of the research respondents accepted that the level of skills in co-located teams was low (Reed & Knigt, 2010).

Moreover, when there is a need to relocate, co-location becomes even more expensive. For instance, during the development of ERJ-170/190 series, the Embraer Aeroscope was forced to construct an exclusively new structure to accommodate a team of 600 engineers who came from different geographical locations. Adaptation to various locations may become difficult for other team workers. Co-located team requires individuals to leave their locations and go to the destination where the project is executed. According to the research conducted by Reed and Knight (2010), considering a p-value of less than 0.02, 70.21 percent of the co-located team respondents confirmed that language barrier and the difference in culture affect the performance of the team. Due to cultural differences, language barrier, as well as the difference in the environment and federal laws among various countries, some team workers may experience difficulties in adaptation.

Strategies to Solve Challenges and Problems That Co-Located Teams Face

Lack of coordination, differences in ideas, and insufficient communication affect the success of co-located teams. When forming co-located teams, making sure that the language barrier has no effect on the team plays a significant role in ensuring the efficiency of the project (Orhan, 2014). Selecting group members who share a common language improves the effectiveness of face-to-face conversation, problem-solving, and decision-making during project implementation. The procedure used to solve problems in co-located teams plays a vital role in the overall productivity. Therefore, identifying the right and fair process becomes necessary. First, there is a need to identify the issue and be clear about the problem. Second, one needs to understand the interest of the team to ensure that the solution to the problem satisfies everyone. Following, one should provide possible solutions through brainstorming team members to enhance creativity (Van den Bulte & Moenaert, 1998). Subsequently, there is a need to evaluate an option and select the best one that meets the interests of all or the majority of team members. After agreeing on the solution, the team ensures that the solution becomes foreseeable for situations.

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Factors Contributing to Shift from Co-Located Teams to Virtual Teams

The key objective of a commercial organization is to minimize the operating costs and maximize the profit. Business organizations use virtual teams to reduce staffing costs and maximize their productivity. According to Orhan (2014), the use of virtual teams reduces office costs. Working from home reduces electricity bills in the office, equipment costs, and the size of the office required. Hiring individuals with all required skills in co-located teams becomes problematic. Organizations use the virtual team to increase the surface area to obtain a greater availability of talent. Furthermore, working from home motivates some employees. For instance, disabled individuals are more comfortable when working from home when compared to traveling every day to a workstation. Moreover, co-located teams may be expensive. Companies have to cater for traveling, communication, and housing costs. With virtual teams, organizations can have workers from different countries with low living costs, who have similar capabilities as employees in the native country (Orhan, 2014). Virtual teams help in marketing when compared to co-located teams. Companies having people working from various countries or locations can easily hire a salesperson without necessarily opening an office.

Advancement in information technology and cultural diversity impact the shift from co-located team to virtual team. According to Van den Bulte and Moenaert (1998), technology boosts the performance of virtual teams; therefore, companies shift from co-located teams due to the cost-efficient nature of virtual teams. The use of informatics in the multicultural workforce has enabled a change because the ability to share information regardless of geographical location is enabled.


Currently, co-located teams face many challenges, including the influence of the language barrier. Despite the challenges facing virtual teams, companies continue to shift from co-located teams due to the reduction in the cost of labor, reduced traveling expenses, and the opportunity to obtain all required talents needed to complete a project in different geographical locations. However, sharing a common workplace enhances innovation and inventions because team members provide different opinions that minimize confusion and help to solve the problem using different approaches.

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