If the employee is going to be a 'peer' then remotely will work fine as they will most likely be responsible and highly motivated to do a good job. If they are just a cog in your machine and productivity is key (thinking not so much), you can't beat local yokels.

Also with developers, there's a huge difference between being able to look someone in the eye after they just horked your entire product/service and trying to do the same over the phone/via email. Remote developers simply don't care, because they don't usually have to care.