Of the many points made by Tom Preston-Warner in his article Open source (almost) everything, I particularly like the paragraph on why you should let your coders work on open source projects:
… dedication to open source code is an amazingly effective way to retain … talent. Let’s face it, great developers can take their pick of jobs right now. These same developers know the value of coding in the open and will want to build up a portfolio of projects they can show off to their friends and potential future employers. That’s right, a paradox! In order to keep a killer developer happy, you have to help them become more attractive to other employers. But that’s ok, because that’s exactly the kind of developer you want to have working for you. So relax and let them work on open source or they’ll go somewhere else where they can.