For sure there is a downside. To develop real expertise in a domain takes time. We have people hopping between jobs before they've even learnt how to do one job right.

In software it can take a long time between writing the code and seeing what happens to it in the long term. How it evolves. How it's maintained. Quality. If you never close this loop you're limited in your growth as a software engineer.

I don't know what the magic number is but I can relate to 2-4 years before you feel like you're comfortable in a new and complex domain. So ideally people stay some reasonable time beyond that. The company is getting a lot more out of this person then they did when they started so it should be a win-win. Instead what's happening is this guy is going to jump ship, get a higher pay, and be totally ineffective or even contribute negatively, and the company will hire someone new and possibly pay that new person more than the original guy, only to have him spend a ton of time getting up to speed...