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The only real downside is data control (ie - the company has less control over how a developer manages assets like source code). ). I'm my experience, the vast majority of companies should worry less about this [...]I once had to burn a ton of political capital (including some on credit), because someone who didn't understand software thought that cutting-edge tech startup software developers, even including systems programmers working close to metal, could work effectively using only virtual remote desktops... with a terrible VM configuration... from servers literally halfway around the world... through a very dodgy firewall and VPN... of 10Mb/s total bandwidth... for the entire office of dozens of developers.
(And no other Internet access from the VMs. Administrators would copy whatever files from the Internet that are needed for work. And there was a bureaucratic form for a human process, if you wanted to request any code/data to go in or out. And the laptops/workstations used only as thin-clients for the remote VMs would have to be Windows and run this ridiculous obscure 'endpoint security' software that had changed hands from its ancient developer, and hadn't even updated the marketing materials (e.g., a top bulletpoint was keeping your employees from wasting time on a Web site that famously was wiped out over a decade earlier), and presumably was littered with introduced vulnerabilities and instabilities.)
Note that this was not something like DoD, nor HIPAA, nor finance. Just cutting-edge tech on which (ironically) we wanted first-mover advantage.
This escalated to the other top-titled software engineer and I together doing a presentation to C-suite, on why not only would this kill working productivity (especially in a startup that needed to do creative work fast!), but the bad actors someone was paranoid about could easily circumvent it anyway to exfiltrate data (using methods obvious to the skilled software people like they hired, some undetectable by any security product or even human monitoring they imagined), and all the good rule-following people would quit in incredulous frustration.
Unfortunately, it might not have been even the CEO's call, but a crazy investor.