Joel Spolsky has some thoughts on what it means to hire the best programmers:
So, why isn’t there room in the software industry for a low cost provider, someone who uses the cheapest programmers available? (Remind me to ask Quark how that whole fire-everybody-and-hire-low-cost-replacements plan is working.)
Here’s why: duplication of software is free. That means that the cost of programmers is spread out over all the copies of the software you sell. With software, you can improve quality without adding to the incremental cost of each unit sold.
Essentially, design adds value faster than it adds cost.
Or, roughly speaking, if you try to skimp on programmers, you’ll make crappy software, and you won’t even save that much money.
He also provides some quantitative evidence that the variation in ability among programmers is very high, at least in terms of implementing various features and algorithms. Of course, there’s more to being a professional software engineer than being able to crank out the code (even though that’s the most important skill). For guidance on this, see Eric Sink.