This is a thinly veiled marketing pitch, justifying the extra cost of buying from the guy with a team in NYC, rather than the guy with a team in Russia.

To get it right, we need to not only have a tight feedback loop with you, we want to become you. ... That's hard to do across two oceans.

No, that's hard to do - full stop. You're not bringing your full 15 (I'm guessing) man development team to your client-site for more than a curtesy visit - and certainly not "to become" your client. That's for your analysts. And why would that be significantly more difficult over an ocean than over a desk?

It's nearly impossible to do that if we're shipping chunks of an effort in packages halfway across the world.

Then don't ship "packages". My offshore team work off the exact same Trac-issue-list that the rest of my team does.

Software can always be built elsewhere, but the basic premise that the early blueprints are 100% dead-on are a fantasy.

Strawman! "outsourcing=waterfall=bad" vs. "insourcing=agile=good"? No..

But connectedness alone doesn't lay the groundwork for building great product.

But somehow you seem to argue that un-connectedness does? Bah.