Despite widespread and growing prevalence of virtual teams, there is little understanding of the way virtual teams benefit from global distribution. Virtual teams are predicted by many to be the form that is much more flexible than traditional teams. As part of an ongoing research, in this paper we present a theoretical framework towards unraveling the relationship between the level of virtuality of a software development project team and it’s flexibility to respond to various environmental changes. Propositions are developed to identify the impact different dimensions of virtuality, viz., team dispersion, workplace mobility, and variety of practices, can have on flexibility to business changes, and flexibility to technological changes.