The classic co-located team is always the the best option. This set-up is not always feasible and distributed virtual team is used instead. There are a number of challenges for virtual teams:

The benefits to Agile virtual teams don’t come without corresponding challenges. These include:

  • Juggling time zones to accommodate mutual meeting times
  • Challenges to building trust; teams may question the approach of other teams
  • Lack of an understanding of the business drivers
  • Cultural differences between team members or entire teams
  • Lack of coordination, which can potentially result in redundancy of developed modules
  • Disjointed communications or inadequate teleconference etiquette

via SEI Quarterly | Turn on a Dime: Leveraging Agile Development with Virtual Teams.