Yes, it can be but it depends on your circumstances. My shop has done it very successfully for 16 months. But there are a number of critical issues to consider

Yes, it can be but it depends on your circumstances. My shop has done it very successfully for 16 months. But there are a number of critical issues to consider. The physical organisation of a workspace is a function of communication. Place those people who communicate a lot physically together because informal conversation is a lot cheaper than formal conversation. When you are writing software you therefore have to have the specifier and the coder co-located. Open Source projects work very well because (in the vast majority of cases) they are copying existing software. So sitting at home working on a clone of Microsoft Word - the specifier (a copy of Microsoft Word) is sitting next to the coder. When writing original software where the specification/product development is the core task this will be much harder - it may be impossible unless your specifier is an expert business architect, software architect and designer and can produce build-able specs and your team are capable of reading and implementing them on sight. You must also choose your toolset correctly to generate a high volume of informal communication, so: * central SVN * centralised mailing list (no point-to-point e-mails) * continuous build with statuses Essentially on the software development side the complete open source software development stack is optimised for this stuff, so its a doddle - your work has an observable daily heartbeat. For other sorts of work (say sales, order fulfilment, HR, finance, etc, etc) it is much harder because the core stack doesn't exist - you will have to create it. The final thing you will have to do is be rigorous on formal comms. You will need to have an all hands call every working day. Sometimes 5 minutes, sometimes 35 minutes. You will need to organise face-to-face meetings regularly, Xmas dinners, launch parties, drinks and stuff. It can be very effective at reducing costs but it is a considerable management challenge and you need to think of it as such. If you adopt a "hey we don't need no steenkin management bullshit, we're way tool techies, hey!" you're probably doomed anyway.