Working environment has been transformed by this pandemic into flexible work arrangements with a swift acclimatization of technology. The post-pandemic working arrangements are expected to be increasingly driven by technology as business models will also evolve to adopt these changes. Virtual working arrangements bring several challenges like reduced trust, disrupted communication, limited collaboration, lack of role clarity and lowered team performance. The research suggests that the future of work is going to be more dynamic and virtual. The normal physical work arrangements that were in place before the pandemic will evolve to include multiple models. Therefore, the challenges and problems associated with virtual working needs to be addressed along with the increasing adoption. Cultural intelligence helps in fostering ‘trust and understanding’ even among virtual teams. The study surveyed people working virtually during this pandemic and analysed, if cultural intelligence and its dimensions i.e. cognitive, metacognitive, motivational and behavioural have effect on the challenges faced by the virtual teams. It is observed that the behavioural cultural intelligence predicts virtual team effectiveness and address the challenges faced by virtual teams.