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Since so much emphasis is placed on communication in the Agile process (especially face to face) - it seems that trying to do Agile with an offshore or distributed team is a compromised solution. Is it possible for such a team to ever really overcome this problem or will they always be performing worse than a face to face team?

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I think Agile teams that are not collocated can be successful but at a higher price. It takes a lot of extra effort put forth by team members to establish the same lines of communication. Teams working out of one central location experience the benefits of daily interaction and can solve problems easier and more efficiently. Additionally, bonds are formed within teams as interactions increase allowing the team to feel more like they are part of something and are working together to achieve a common goal.

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Here is a good blog post I read about Distributed Agile:stickyminds.com/…; – Katie Jan 5 at 16:07
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I just blogged on that yesterday: http://www.targetprocess.com/blog/2009/11/face-to-face-united-we-stand.html The evidence is that agile is best tailored for collocated teams. With offshore, there're many "if's".

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