diff --git a/modules/compute-vm/README.md b/modules/compute-vm/README.md
index e025e1f6b..752a54e42 100644
--- a/modules/compute-vm/README.md
+++ b/modules/compute-vm/README.md
@@ -293,7 +293,7 @@ module "instance-group" {
 | name | description | sensitive |
 |---|---|:---:|
 | external_ips | Instance main interface external IP addresses. |  |
-| group | Instance group resource. |  |
+| groups | Instance group resources. |  |
 | instances | Instance resources. |  |
 | internal_ips | Instance main interface internal IP addresses. |  |
 | names | Instance names. |  |
diff --git a/modules/compute-vm/main.tf b/modules/compute-vm/main.tf
index 08c0b1b6a..4d4eaf139 100644
--- a/modules/compute-vm/main.tf
+++ b/modules/compute-vm/main.tf
@@ -368,8 +368,10 @@ resource "google_compute_instance_template" "default" {
 }
 
 resource "google_compute_instance_group" "unmanaged" {
-  count = (
-    var.group != null && !var.use_instance_template ? 1 : 0
+  for_each = toset(
+    var.group != null && !var.use_instance_template
+    ? local.zones_list
+    : []
   )
   project = var.project_id
   network = (
@@ -377,11 +379,12 @@ resource "google_compute_instance_group" "unmanaged" {
     ? var.network_interfaces.0.network
     : ""
   )
-  zone        = local.zones_list[0]
-  name        = var.name
+  zone        = each.key
+  name        = "${var.name}-${each.key}"
   description = "Terraform-managed."
   instances = [
-    for name, instance in google_compute_instance.default : instance.self_link
+    for name, instance in google_compute_instance.default :
+    instance.self_link if instance.zone == each.key
   ]
   dynamic "named_port" {
     for_each = var.group.named_ports != null ? var.group.named_ports : {}
diff --git a/modules/compute-vm/outputs.tf b/modules/compute-vm/outputs.tf
index 37529ff94..6dd86c285 100644
--- a/modules/compute-vm/outputs.tf
+++ b/modules/compute-vm/outputs.tf
@@ -26,9 +26,9 @@ output "external_ips" {
   )
 }
 
-output "group" {
-  description = "Instance group resource."
-  value       = try(google_compute_instance_group.unmanaged.0, null)
+output "groups" {
+  description = "Instance group resources."
+  value       = google_compute_instance_group.unmanaged
 }
 
 output "instances" {
diff --git a/modules/net-ilb/README.md b/modules/net-ilb/README.md
index 2b7460f08..31bd0dd4b 100644
--- a/modules/net-ilb/README.md
+++ b/modules/net-ilb/README.md
@@ -99,16 +99,18 @@ module "ilb" {
   network       = var.vpc.self_link
   subnetwork    = var.subnet.self_link
   ports         = [80]
-  backends = [{
-    failover       = false
-    group          = module.instance-group.group.self_link
-    balancing_mode = "CONNECTION"
-  }]
+  backends = [
+    for name, group in module.instance-group.groups : {
+      failover       = false
+      group          = group.self_link
+      balancing_mode = "CONNECTION"
+    }
+  ]
   health_check_config = {
     type = "http", check = { port = 80 }, config = {}, logging = true
   }
 }
-# tftest:modules=2:resources=5
+# tftest:modules=2:resources=6
 ```
 
 <!-- BEGIN TFDOC -->
diff --git a/networking/ilb-next-hop/gateways.tf b/networking/ilb-next-hop/gateways.tf
index 540b2cbef..88bea42fb 100644
--- a/networking/ilb-next-hop/gateways.tf
+++ b/networking/ilb-next-hop/gateways.tf
@@ -75,7 +75,7 @@ module "ilb-left" {
   }
   backends = [{
     failover       = false
-    group          = module.gw.group.self_link
+    group          = values(module.gw.groups)[0].self_link
     balancing_mode = "CONNECTION"
   }]
   health_check_config = {
@@ -99,7 +99,7 @@ module "ilb-right" {
   }
   backends = [{
     failover       = false
-    group          = module.gw.group.self_link
+    group          = values(module.gw.groups)[0].self_link
     balancing_mode = "CONNECTION"
   }]
   health_check_config = {
diff --git a/tests/modules/compute_vm/test_plan.py b/tests/modules/compute_vm/test_plan.py
index 43697d7b2..26d48b102 100644
--- a/tests/modules/compute_vm/test_plan.py
+++ b/tests/modules/compute_vm/test_plan.py
@@ -62,6 +62,16 @@ def test_group(plan_runner):
   ])
 
 
+def test_group_zones(plan_runner):
+  _, resources = plan_runner(FIXTURES_DIR, instance_count=2,
+                             group='{named_ports={}}',
+                             zones='["europe-west1-b", "europe-west1-c"]')
+  assert len(resources) == 4
+  assert set(r['type'] for r in resources) == set([
+      'google_compute_instance_group', 'google_compute_instance'
+  ])
+
+
 def test_iam(plan_runner):
   iam = (
       '{"roles/compute.instanceAdmin" = ["user:a@a.com", "user:b@a.com"],'