Live in a matrix organization within functional manager in one axis and the team leader in another axis have a lot of problems, mainly when there is not coordination between both axis, or when there is not the right balance in terms of authority.
One of the long term benefit looked into this type of organizations is the organic growth of the people which compose these teams, not only in terms of responsibility but in terms of knowledge and capabilities.
This is something difficult to implement because managers tend to look for the quarter deadline results, ignoring long term results.
Why to implement an organization like this? Probably this company implements this type of organization because it tries to build a long relationship of the employee within the company; so it’s understood that the growth of the employees is a must.
This fact cannot be ignored by the managers: it’s important that the growth of their careers will be done as the growth/change of the IT sector is huge.
I have seen managers ignoring the long term development of their teams and looking for short term benefits. After some years, they need to replace some people or reorganize the teams because the lack of growth in their careers, provoking in addition a lot of damages in the team and the company because it breaks the balance of the investment that the company tries to implement for the complete organization.
Of course you need to have the right balance between organic growth and new staff in your company, but to build it; you need to understand the whole picture of your organization.