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The virtual organization is emerging as a much‐researched phenomenon in the context of inter‐organizational relationships as well as intra‐organizational issues. However, the existing literature on the subject provides multifarious views of virtual organizations, making it difficult to compare findings in research and derive actionable inputs for practice. This paper proposes a multi‐dimensional model with nine possible variants that serves to accommodate and understand virtuality in its various forms, giving greater conceptual clarity on how virtuality can be measured and interpreted in an organizational context.

A review of the literature shows that most discussions on virtuality have not made a clear delineation of its facets.

This paper first identifies the granularity and directionality of virtuality in order to understand virtuality in its different contexts. It then suggests that virtuality should be examined in terms of factors that influence it, the degree of virtuality, and the outcomes of virtuality.

Given the breadth of coverage required to present a model in an area that is as large and complex as virtual organizations, a detailed discussion of the operationalization of the constructs has not been possible.

From a researcher's perspective, this model should aid a better understanding of virtuality whilst providing a framework within which existing and future contributions in this area can be studied. From a managerial perspective, this can be used by organizations to assess whether virtuality is indeed leveraged as a strategic tool or is largely a mere technological phenomenon.

With an increase in global outsourcing, there is a need for risk mitigation strategies for outsourcing partner selection. Most outsourced services are getting commoditized, making it difficult to clearly differentiate capabilities of service providers. Also, the move towards knowledge process outsourcing (KPO) services is an area where the risks of failure are perceived to be higher. Since the knowledge dimension is a critical one for any outsourced activity, an objective assessment of knowledge gaps is important in the overall process of evaluation of the external provider. This paper aims to address the issues involved.

The paper builds the linkage between the measurability of the knowledge dimension and outsourcing project success through a set of propositions. It proposes a formal process of “knowledge gap assessment” as an input to assessing partner viability. It also identifies two important dimensions that are specific to an outsourcing relationship. Finally, the paper outlines a conceptual framework that takes these dimensions into account through a process of benchmarking using role simulations that could be used as a generic tool for performing such an assessment.

Such an assessment can help to classify prospective service providers as exhibiting low‐, moderate‐ or high‐knowledge gaps in different knowledge categories. Depending on the cost of bridging these gaps the associated risks can be classified as low, medium or high, facilitating appropriate managerial decisions.

This paper proposes a conceptual model and a set of propositions which will need to be tested and refined through further empirical research.

The framework can be a useful tool for partner selection by firms who are looking to outsource activities. A simulation‐based benchmarking approach is likely to provide a more objective assessment of a firm's knowledge‐based capability, both when compared to the parent (outsourcing) organization as well as other short‐listed service providers.

This paper fulfils an identified need for minimizing risk in both business process outsourcing as well as KPO projects by focusing on the knowledge dimension and offers a practical framework to enable the same.