Employer Branding and Talent Retention in Sri Lanka’s It Sector: The Mediating Role of Employee Engagement

Abstract

Background: Sri Lanka’s IT sector faces growing challenges in retaining skilled employees due to intense competition and global job opportunities. Employer branding has become an important strategy for attracting and retaining talent, while employee engagement plays a key role in strengthening this relationship. However, limited research has examined these factors together in the Sri Lankan IT context. Objective: This study aims to examine the impact of employer branding on talent retention among the IT sector employees in Sri Lanka. It further analyzes the mediating role of employee engagement in this relationship, drawing on the principles of Social Exchange Theory (SET). Methodology: A quantitative research design with a deductive approach was employed. Data were collected through a structured questionnaire, and 203 usable responses were obtained from IT professionals in Sri Lanka, using convenience sampling. Convenience sampling was selected because it allowed efficient, flexibility and timely access to a large number of readily available IT professionals in Sri Lanka within the study’s resource and time constraints. Key Findings: The results of the regression analysis revealed that employer branding has a significant positive influence on talent retention (β = 0.46, p < 0.001). The model explained 42% of the variance in talent retention (R² = 0.42). Further, the mediation analysis indicated that employee engagement partially mediates the relationship between employer branding and talent retention. The indirect effect was significant (β = 0.18, 95% CI [0.09, 0.29], p < 0.01), confirming partial mediation. Conclusion/Implication: The findings demonstrate that effectively communicated employer brand value elements enhance employee engagement, which subsequently improves retention in Sri Lanka’s IT sector. In practice, the study underscores the need to align brand promises with concrete initiatives such as career development, recognition systems, and work-life balance programs, ensuring that employer branding translates into sustained commitment. The results also highlight the importance of strengthening relational and emotional connections between employees, team leaders, and senior management, offering practical guidance for managers and HR practitioners to foster long- term loyalty and retention.