Distributed vs Remote Teams: What’s the Difference?

The days of sprawling physical office spaces filled with tight cubicles, maze-like hallways, and nameplated doors are over. That image is so dated that sci-fi television shows like Severance use scenes of traditional office environments to disorient the viewer. 

Modern offices are usually open concept and now use hot-desking to save space, as the average employee spends 3.3 days per week working at home when given a flexible schedule. 

If people aren’t going to be working from a central office, it opens up several questions about the future of employment. 

• Do you need a company office? 
• Do your team members need to be in the same country?
• What kind of benefits could you leverage if hiring from around the world?

Welcome to the wide world of distributed teams, a new way of operating for the next generation. 

What Are Distributed Teams?

In a world where digital connectivity has bridged geographical gaps, distributed teams have emerged as a game-changer in modern employment. 

Simply put, distributed teams are groups of professionals who collaborate and work together from various locations around the globe. They don’t share an office—or sometimes even a timezone.

Team members can seamlessly connect to achieve their goals thanks to technological advancements and regular communication tools such as video conferencing, instant messaging, project management software, and cloud-based platforms.

What Are the Differences Between Distributed Teams and Remote Teams?

You may be thinking, “Are remote and distributed teams the same thing?”—while they share some characteristics, understanding key differences is critical before implementing either in your company. 

Physical location

Distributed teams consist of employees who work from various locations around the world. They may be in different time zones or continents, contributing expertise asynchronously during their working hours. 

On the other hand, remote teams refer to individuals working away from a central office but still within proximity of each other or the company headquarters. Remote employees may work in a hybrid approach, for example, a few days from home or co-working spaces in the same city, while occasionally visiting the central office for meetings and events.

Office space

In a distributed team setup, there is no shared office space where all employees come together to work. 

Instead, each member works from their preferred location – their homes, local cafes, or rented co-working spaces. This flexible working arrangement allows organizations to save on overhead costs for businesses that maintain large offices and benefit from talent across different regions.

Remote teams also enjoy the flexibility of not being tied down to a specific workplace. However, they may still have access to central office space for occasional meetings, training sessions, or company events. 

They may even be required to spend a certain amount of time each week in the office or attend mandatory regular functions. 

Emotional connection

Distributed teams rely heavily on technology and digital collaboration tools to stay connected and foster emotional bonds among team members.

The challenge lies in creating an inclusive work environment that transcends physical barriers. Virtual team-building activities, regular video calls, and celebrating milestones can help distributed teams build company culture and strong connections despite being miles (or oceans) apart.

Remote teams have the advantage of using synchronous communication to maintain working relationships with colleagues and leadership. 

They can participate in face-to-face team meetings, attend company events, and engage in team-building activities more frequently than distributed teams. This proximity helps remote employees feel closer to their colleagues and fosters a sense of belonging.

What Are the Benefits of Working as a Distributed Team?

Distributed teams have emerged as an increasingly popular working model, offering numerous advantages to organizations and employees.

Global access to top talent

One of the most significant benefits of having a distributed team is that your organization can tap into talent from anywhere in the world. You're no longer limited by geographical boundaries or forced to settle for local candidates who may not possess the necessary skills or expertise. 

With a larger talent pool of professionals at your fingertips, you can build diverse teams with unique perspectives and experiences that drive innovation and growth.

Diverse regulations and benefits

Organizations can take advantage of different regulations and benefits that vary across countries. This allows companies to optimize operations by leveraging local or regional: 

• Incentives
• Tax breaks
• Grants

Moreover, as employees work under different labor laws and social security systems, your organization can benefit from tailoring compensation packages according to the specific rules and benefits provided in each country.

Hiring contractors and freelancers

Another advantage of global access is hiring skilled contractors or freelancers for short-term projects or specialized tasks. This flexibility enables companies to scale up or down their workforce based on current needs without committing to long-term contracts or full-time hires. 

By engaging expert freelancers, you can access niche skills and knowledge that may not be readily available within your existing team. This helps drive innovation and improve the overall quality of work your organization produces.

Better retention

Distributed teams allow employees to work from their preferred locations, contributing to improved work-life balance. This flexibility can lead to higher job satisfaction and better employee retention. 

By allowing team members to create personalized working environments that cater to their needs and preferences, your organization demonstrates a commitment to employee well-being – an essential factor in retaining top talent.

No need to relocate

One key factor contributing to better retention in distributed teams is eliminating relocation requirements. Employees can work without uprooting their lives and moving away from family, friends, or familiar surroundings. 

This freedom reduces stress associated with moving and helps to minimize turnover related to location dissatisfaction or personal circumstances that may arise due to long-distance moves. 

Overhead cost savings

Organizations can significantly reduce their overhead managerial costs by operating as a distributed team while maintaining high efficiency and productivity levels. With a global talent pool, businesses can access diverse expertise and skill sets, often reducing the need for extensive management structures and supervision.

Tapping into a global talent pool also leads to a more streamlined, self-motivated, and responsible workforce, decreasing managerial expenses.

As distributed teams eliminate the need for large office spaces, organizations save on rent, maintenance, utilities, furniture, and equipment costs associated with traditional physical offices. 

Employees in distributed teams also benefit from reduced commuting costs, which can be a significant financial burden in some regions. 

Examples of how distributed teams can save money

The cost savings associated with distributed teams become more evident when examining real-life examples, such as the high rent prices in Midtown Manhattan. 

Office spaces can be costly, with an average monthly rent of over $80 per square foot. Considering that a typical office requires 150-250 square feet per person, this translates to a monthly expense of $12,000-$20,000 for just ten employees in a traditional setting.

In contrast, office space in Chicago averages around $36 per square foot. While this is more affordable than Manhattan, costs can still add up quickly. That same ten-employee company in a traditional Chicago office would cost between $5,400 and $9,000 monthly.

Organizations can save significantly on rental expenses regardless of their location by shifting to a distributed team model and eliminating the need for centralized offices. These savings can then be redirected toward the following:

• Investing in advanced technology and tools for enhanced collaboration
• Providing competitive compensation packages to attract top talent
• Offering better employee benefits, such as comprehensive healthcare plans or continuous learning opportunities
• Allocating resources toward research and development initiatives
• Expanding marketing efforts to reach a wider audience
• Supporting corporate social responsibility programs or community outreach projects

By reallocating financial resources saved from reduced overhead costs, organizations can focus on strategic investments that drive growth and improve overall employee satisfaction and engagement.

Improved employee productivity

A study conducted by the Slack Future Forum revealed that remote and distributed workers tend to be more productive than their in-office counterparts. 

Some of the reasons for this increased productivity include:

• ‍Reduced distractions: A remote environment allows for employee autonomy, minimizing interruptions and background noise commonly found in traditional office settings, enabling better focus on tasks.‍
• Flexible schedules: Distributed teams often have the freedom to set their work hours, allowing them to work during their most productive periods or when they feel most energized.‍
• Time saved on commuting: Remote employees can utilize the time saved from not having to commute for work-related tasks or personal development, leading to increased efficiency and job satisfaction.‍
• Customizable workspaces: Employees working remotely can create personalized workspaces catering to their needs, preferences, and comfort levels. This flexibility results in a more conducive environment for productivity.‍
• Improved work-life balance: Managing personal responsibilities alongside professional commitments helps alleviate stress and enhances overall well-being, positively impacting productivity.

Distributed teams may enjoy an additional edge as they bring together diverse perspectives and experiences from across the globe. This unique blend of talent fosters innovation and creative problem-solving, enabling organizations to address challenges more effectively and capitalize on new opportunities. 

Increased agility

Bill Gates once said, "Success today requires the agility and drive to rethink, reinvigorate, react, and reinvent constantly." Distributed teams exemplify this concept of agile teams through their presence across multiple time zones. 

This round-the-clock workforce enables organizations to capitalize on every opportunity and ensures prompt response in times of crisis.

A continuous workflow is created by having employees working in various time zones, allowing businesses to operate 24/7. This capability can be particularly beneficial in industries such as customer support, where real-time responses are crucial for maintaining client satisfaction and loyalty.

They can respond swiftly to unforeseen events or emergencies by leveraging the availability of team members who are already online in different parts of the world.

This immediate response capability can significantly reduce downtime and mitigate potential losses, providing a competitive advantage to organizations with distributed teams.

What Are the Challenges of Working as a Distributed Team?

While distributed teams offer numerous benefits, they also come with their own set of challenges. Some of these include:

• Communication barriers due to differences in language and culture
• Establishing trust and rapport among team members who may never meet face-to-face
• Ensuring consistent work quality and adherence to company standards across different employee locations
• Coordinating schedules and deadlines across multiple time zones
• Providing adequate training and onboarding for remote employees without physical interaction
• Addressing feelings of isolation or disconnection experienced by some remote workers

By recognizing and proactively addressing these challenges, organizations can enjoy the benefits of distributed teams while minimizing potential drawbacks.

How To Manage a Distributed Team

Successfully managing a distributed team requires focusing on key aspects that ensure smooth collaboration, lines of communication, and productivity. 

Here are five crucial areas to concentrate your efforts:

1. Clear communication channels

Establishing precise methods of communication is vital when managing a distributed team. Utilize tools like video conferencing, instant messaging platforms, and project management software to facilitate seamless interaction among team members.

2. Setting expectations and goals

Ensure all team members have a solid understanding of their roles, responsibilities, and expectations. Establish well-defined goals and objectives for the entire team so everyone can work towards common targets.

3. Trust and empowerment

Foster a culture of trust by giving team members the autonomy to make decisions within their areas of expertise. Encourage open lines of communication, provide constructive feedback, and empower employees to take ownership of their work.

4. Regular check-ins and updates

Schedule regular check-ins with individual team members and group meetings to discuss progress, address concerns, and share updates. This helps maintain accountability while keeping everyone on the same page regarding project developments.

5. Building team cohesion

Invest in virtual team-building activities to strengthen bonds among distributed team members who may need more opportunities to interact face-to-face. This helps create a sense of belonging and camaraderie, contributing to better collaboration and overall team performance.

Final thoughts

In today's rapidly evolving business landscape, embracing distributed teams has become more than just a trend—it's a strategic approach to building a successful and resilient organization. 

Adopting this modern workforce model is just some benefits of harnessing the power of global talent, improving productivity, and increasing agility.

To further illustrate the potential advantages, we invite you to explore our case study on Northstar, who saved $250K by scaling their remote workforce with Near. Discover how they transformed operations and tapped into new opportunities through effective distributed team management.

If you're ready to build your distributed or remote team with great Latin American talent, Near is here to help. With our expertise and extensive network, we can connect you with top-tier professionals across the region, ensuring a seamless hiring experience that sets your organization on the path toward success.