I think you mean cheaper employee.
I work for a fully remote company. Most of us are based in the US but the company also hires people from some other countries through some kind of agency. Even though many, probably a majority of the US-based people are immigrants (myself included), and many don't speak English any better than the agency people, there's still somehow a clear divide. The agency people are great - talented, skilled, no issues. But somehow they understand the business less. Their contributions are purely technical. It's clear that the company could not just can us all and hire the same number of agency guys, but it's hard to explain why.
My previous employer once tried to outsource some stuff to India and sent a guy over there to oversee it. It didn't go well. But we had lots of Indian people before and since in the company, and they were great. They had the same background, same education. But they were local to the company.
I often think of the first iPhone as an extreme example of what I'm trying to say. It was built in China using parts sourced from China. But it was invented in California, and it had to be. From the inventors and the builders there's a sort of spectrum, a range of people, like the developers who conceived and wrote the first killer apps - and the closer you are to the inventing side of things, the closer you need to be to the heart of the company.
If I had to put sum it up in a word, I'd say it's "ambiguity". Knowing what to do when you don't have exact instructions requires you to be steeped in the same culture as the CEO and the main market. This isn't a fixed thing: I'm sure there's a market for luxury devices in China now that Americans find it hard to understand. But in general the countries that are the most developed have already experienced what other countries are going through, and thus they are uniquely positioned to dictate what the next big thing is.
So companies will always have to do some hiring locally, and the harder the job, the more important it is to be local.
Simply speaking, it's better to expand vertically because it's a lot easier to work with people in the same time zone. That's one reason tech is on the west coast.
Because people are not automatons, there are often situations where a company has offices in, say, New York and Zurich, and some employees in the New York office moved from Zurich and some employees in the Zurich office moved from New York.
So it does not help retention in the way you believe.
It is beneficial for retention because companies who don't apply for green cards for employees will lose them to firms that apply.