I've seen that particular policy, and I've got to say, I don't really understand how a company can employ it for great lengths of time and see it working.
If you induct a bunch of new, young hires at the same time - which seems to be common - they bond with each other. Then they hang out in the company for a while - maybe even a year.
Then they realize that raises aren't forthcoming. Sometimes, the bigger trigger is one of the group finds something elsewhere for higher pay just with that tiny bit of experience under their belts, and that emboldens the rest.
I saw a company finally wake up to that, and they changed their policy to allow hiring of senior people... then the complaint was that they couldn't find good senior people any more, a complaint reflected across their particular industry.
With software, I guess that those "cost centers" actually take a little while for their effects to kick in, because they can coast on the work of the people who are gone just because of the way release cycles work. That's a barrier to corporate learning.