It is not easy coordinating meetings between Israel (GMT +2), India (GMT +5.5) and California (GMT -8). There is no question that it requires alot of coordination and procedures. However, I have found that if both sides are willing to make the effort not only can it work, but you get the advantages of people working almost around the clock.
It clearly also depends on the kind of work that you do. If you are writing user business applications, it makes alot of sense for the development team to be near the users and have alot of interaction with them. My team, does system level/middleware type work which doesn't require nearly as much user interaction. This kind of work can be done in a remote location much easier.