A VDR service provider provides a range of software features to streamline and automate the storage and collaboration of documents. Virtual data rooms come with numerous features not available in file-sharing apps for the consumer or standard office software. This makes them a vital tool for business processes. For instance it is a VDR encrypts files as they transfer between users, and can be set up to manage various file formats and sizes depending on the needs of the user (lawyers may require sharing mostly written documents, while architects or doctors may need to share high-definition images and videos) and provides detailed activity reports that can be submitted to regulatory agencies.

VDRs are also used to support due diligence that lets investors and companies look over sensitive information about an acquisition. They are also used to store and manage legal contracts as well as partnership agreements, life science product development and other complicated business projects. VDRs are also used to manage the process of recruitment, including onboarding and offboarding staff as well as handling related paperwork. They can also be used as a secure repository to keep and secure documents and data related to pending litigation.

The best VDR providers are those that adhere to strict security standards, and provide features that meet the needs of specific industries. They should also have the highest security certifications, such as FedRAMP, FINRA, and HIPAA along with advanced features such as real-time vector-watermarking, classification of labels and malware detection. They can be set up to meet the needs of different user types and accessibility levels, as well as the ability to restrict access to certain areas like a view-only, downloading or editing access. Administrators can also revoke the access privileges to avoid security violations.