Round-the-clock work cycle, low cost of software development, and access to specialized skills have prompted many companies in the USA, Canada, and Europe to outsource some or part of their software development work to off-shore centers in countries such as India. While design, development, and testing phases that are traditionally off-shored require less interaction between clients and the off-shore consultants, phases such as requirements engineering require close co-ordination and interaction. The clients and consultants in such off-shored projects often work in a virtual team environment. In this research, our endeavor is to understand the complex issues in such a virtual project environment during the requirements definition phase of the software development cycle. In particular, we conducted an exploratory research study, involving 24 virtual teams based in Canada and India, working collaboratively on defining business requirements for software projects, over a period of 5 weeks. The study indicates that trust between the teams and well-defined task structure positively influence the performance, satisfaction, and learning level of such distributed virtual teams.