Virtual existence: Concepts, Working, Advantages and pitfalls of Virtual Organizations

This new form of organisation, i.e., ‘virtual organisation’ emerged in 1990 and is also known as digital organisation, network organisation or modular organisation. Simply speaking, a virtual organisation is a network of cooperation made possible by, what is called ICT, i.e. Information and Communication Technology, which is flexible and comes to meet the dynamics of the market.

Alterna­tively speaking, the virtual organisation is a social network in which all the horizontal and vertical boundaries are removed. In this sense, it is a boundary less organisation. It consists of individual’s working out of physically dispersed work places, or even individuals working from mobile devices and not tied to any particular workspace. The ICT is the backbone of virtual organisation.

It is the ICT that coordinates the activities, combines the workers’ skills and resources with an objective to achieve the common goal set by a virtual organisation. Managers in these organisations coordinate and control external relations with the help of computer network links. The virtual form of organisation is increasing in India also. Nike, Reebok, Puma, Dell Computers, HLL, etc., are the prominent companies working virtually.

While considering the issue of flexibility, organisations may have several options like flexi-time, part-time work, job-sharing, and home-based working. Here, one of the most important issues in­volved is attaining flexibility to respond to changes – both internal and external – is determining the extent of control or the amount of autonomy the virtual organisations will impose on their members.

This is because of the paradox of flexibility itself. That is: while an organisation must possess some procedures that enhance its flexibility to avoid the state of rigidity, on the one hand, and simulta­neously also have some stability to avoid chaos, on the other.


  1. Flat organisation
  2. Dynamic
  3. Informal communication
  4. Power flexibility
  5. Multi-disciplinary (virtual) teams
  6. Vague organisational boundaries
  7. Goal orientation
  8. Customer orientation
  9. Home-work
  10. Absence of apparent structure
  11. Sharing of information
  12. Staffed by knowledge workers.

In fact, this list of the characteristics of virtual organisation is not an exhaustive one but illustra­tive only. One can add more characteristics to this list.

Types of virtual organisations:

Depending on the degree or spectrum of virtuality, virtual organisations can be classified into three broad types as follows:

  1. Telecommuters
  2. Outsourcing employees/competencies
  3. Completely virtual

A brief description of these follows in turn.


These companies have employees who work from their homes. They interact with the work­place via personal computers connected with a modem to the phone lines. Examples of compa­nies using some form of telecommuting are Dow Chemicals, Xerox, Coherent Technologies Inc., etc.

Outsourcing Employees/Competencies:

These companies are characterised by the outsourcing of all/most core competencies. Areas for outsourcing include marketing and sales, human resources, finance, research and development, engi­neering, manufacturing, information system, etc. In such case, virtual organisation does its own on one or two core areas of competence but with excellence. For example, Nike performs in product design and marketing very well and relies on outsources for information technology as a means for maintaining inter-organisational coordination.

Completely Virtual:

These companies metaphorically described as companies without walls that are tightly linked to a large network of suppliers, distributors, retailers and customers as well as to strategic and joint venture partners. Atlanta Committee for the Olympic Games (ACOG) in 1996 and the development efforts of the PC by the IBM are the examples of completely virtual organisations. Now, these above types of virtual organisations are summarized in the following Table 34.1.



  1. It saves time, travel expenses and eliminates lack of access to experts.
  2. Virtual teams can be organised whether or not members are in reasonable proximity to each other.
  3. Use of outside experts without incurring expenses for travel, logging and downtime.
  4. Dynamic team membership allows people to move from one project to another.
  5. Employee can be assigned to multiple, concurrent teams.
  6. Teams’ communication and work reports are available online to facilitate swift responses to the demands of the (global) market.
  7. Employees can accommodate both personal and professional lives.
  8. Virtual teams allow firms to expand their potential labour markets enabling them to hire and retain the best people regardless of their physical locations.


  1. The lack of physical interactions with its associated verbal and non-verbal cues and also the synergies that often accompany face-to-face interaction
  2. Non-availability of paraverbal and non-verbal cues such as voice, eye movement, facial expression, and body language which help in better communication.
  3. Ability to work even if the virtual teams are miles apart and the members have never or rarely met each other face-to-face.

But the fact remains that despite these drawbacks; virtual organisations have become a reality and are growing in popularity. By now, several successful cases of virtual organisations abound in our country. It is the explicitly designed ‘Group Ware’, computer based system to support virtual groups, enables the virtual organisations to work in order to achieve a common goal.

Features of virtual organisation:

Information is power. The absence of information and knowledge renders virtual teams to emas­culate and ineffective. Information technology, i.e., seamless web electronic communication media does not allow happening this and keeps the organisation going. Following are the salient features of virtual organisations:


New technology has transformed the traditional ways of working. In particular, the worlds of computing and telephony are coming together to open up a whole new range of responsi­bilities. Computer Telephony Integrations (CTI) will usher in a new revolution to the desktop. The CTI has traditionally been used in all call center applications.

E-mail Integration:

Integrating Short Message Service (SMS) into the existing e-mail infrastruc­ture allows the whole organisation to take advantages of SMS products such as ‘Express Way’.

Office System Integration:

SMS technology can greatly enhance the existing or new office systems, e. g., phone messages can be sent via SMS rather than returning it in a message book.

Voice Mail Alert:

SMS technology added to the existing voice mail system builds an effective method of receiving voice mail alerts.

Mobile Data:

This enables a laptop to retrieve information anywhere through the mobile phone network. Mobile data communications revolutionize where and how work is done. In the past, corpo­rate information has been inaccessible from many places where it is needed. One’s ability to link laptop to mobile phone keeps one connected to his/her virtual organisation from anywhere.

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