One thing this does not account for is that your potential developer pool increases by orders of magnitude with remoting. So, while a team might be more productive co-located, your ability to get much higher quality individuals working for you increases dramatically with remoting.
It appears that the gains from team dynamics (packs) outweigh the average individual quality (lone wolves) for most tasks. The optimal solution in finance, at least, is having the bulk of work done with co-located teams with telecommuting being an option when recruiting niche geniuses for specific tasks.
Point taken. I imagine much depends on the domain and deliverable, as to what that ratio might look like. As someone stated above, not every company is doing ground breaking work which needs the "best and brightest". But some companies might, at least in niche areas as you mentioned.
However, I know from attempting to hire even entry level engineers in sub-250k population areas, it can be very tough to even find a bare minimum candidate. I would jump at the chance to hire a rock-solid developer in a nearby city, state, or even country.
Agreed completely. I'm sorry - I thought I had expressed this in the original post when i said
"Pretty much all the evidence (rather than anecdote) I can find shows that co-located teams in a single team room environment are the most productive - all other things being equal."
If you can think of a way I can express that opinion better I'd appreciate it (This isn't sarcasm - it's a genuine request. Judging by many of the replies here I'm expressing myself badly ;-)
You potentially drive prices down, too, by exploiting cost of living outside your location.
There are plenty of good programmers living in relatively cheap places (Like the Midwest, for example). Pay someone in Minneapolis $10-15k less per year than what that same person would make in Palo Alto and that person could still end up above market for Minneapolis.
