It probably is a cultural difference. I think in the last year or so we have maybe lost a couple of potential customers because we use a distributed team, but it's not been a major problem.

For us, our specific geography is also a factor; my business partner, who also runs 95% of our sales activity, is based in London, and his sales activity is centred around there. Our developers (myself included) are based on the north-west, where developer salaries are lower than in the south. I know that we have used that fact in sales pitches, and it has helped us win work based on that lower total cost of a project.