This sounds great. Certainly the IP zealots love it because the code never leaves the walled garden, and it’s a super-secure blah blah environment. Consistent tooling, easy onboarding… you get the idea. All good until you have an outage. Then your development team’s productivity drops to exactly zero while you fix it and your entire production environment is now potentially vulnerable to defects you can’t fix until t…
You already have the same concern with source control, code review, continuous integration, continuous deployment, etc. Dev servers are arguably much simpler to provide without issues.
None of that is possible in a centrally-managed dev VM setup. When the VMs go down, you send your dev team home until it’s fixed. You’re still paying their salaries while you pay another team to make them productive again.