This is one of the frequent questions asked in Agile adoption. I have worked on a project with 135 developers and as expected it was not going anywhere until someone thought that it was death march to proceed in that way. The team was downsized to 60. The process was changed to Scrum. 6 teams of 10 people each were individual scrum teams. But again within this team of 60 people dispersed across 4 geographic locations coordination and communication was still a challenge.
The “silverish bullet” came in the form of dividing the 6 scrum teams to collocated teams of smaller sizes. So the teams were distributed further with each team now having between 5-8 people. The crux was collocated on the same geography. Of course team communication cannot be ruled out hence one member from each team also met in a Scrum of Scrums fashion. Though the teams were drinking from the same backlog, however the sprint backlog for the teams was decided during the sprint planning meeting. The Sprint backlog were kept as much mutually exclusive as possible, but again SoS (Scrum of Scrums) helped for the rest.
So far it has been working for us. But still, what is the ideal team size? People would mention anything between 3-20! Some Agilists argue that the team size should be FIVE. This is the common denominator number based on various studies and falls on the intersection point of these studies. Want to read more about this magic # 5. Refer my post on InfoQ.
What have been the team sizes that have worked for you and how has that environment been any different from any other environment?