Poor employee retention (high staff turnover) has a negative impact on software development productivity and product quality. Further, offshore outsourcing has a widely held reputation for particularly poor employee retention. Interestingly, in-house sites (regardless of location) do not suffer such high levels of staff turnover.

We want to understand the factors affecting employee retention in-house and offshore outsourced settings, to better understand the potential impact of staff turnover on global software development.

The research employed a mixed-method approach comprising two empirical case studies in industry involving 62 practitioners at three international companies conducting in-house and offshore outsourced software development. We collected practitioner perceptions of causal factors for employee retention and performed a cross-case analysis to triangulate our findings.

Practitioners cited employment policies, work-life balance, workplace innovation, product quality, alignment of offshore work hours with onshore, long working hours and adverse impact on health as factors affecting staff retention. In-house offshore have more family friendly employment policies. In the outsourcing sector, the focus on customer satisfaction sometimes leads to less attractive work patterns.

Offshore outsourcing service providers could improve development team member retention by improving work-life balance and adopting more family friendly employment policies.