Quoting wikipedia, a system call is:
In computing, a system call is how a program requests a service from an operating system's kernel. This may include hardware related services (e.g. accessing the hard disk), creating and executing new processes, and communicating with integral kernel services (like scheduling). System calls provide an essential interface between a process and the operating system.
In ordinary operating systems, when a system call is made the operating system enters kernel mode and performs the requested operation.
What happens to a system call made by a process in a virtual machine? Is it handled by the virtual machine only, or is it delegated to the outer kernel to be operated by the hardware-facing kernel?