RaheemKhanKhattak First, I would invite your developers to come to our community to discuss their concerns, because what they've expressed is not correct. Flarum is built to be easily extensible, and many members of our community have built their own extensions for their and the community's use. If your developers are already familiar with php and js coding, then creating an extension for the Flarum customizations you desire should be within their capabilities.
Yes, if changes are made directly to the core, they will get removed on updates. This is why Flarum is written to encourage the use of extensions, and makes it possible for deep changes to be made via the extension API. Our next version, beta 8, will make significant changes to the extension API that will break current extensions (though many have already been rewritten and are prepared for the changes) but should not have any backwards breaking changes thereafter in our beta period, so if your developers base their customizations on Beta 8 there should be no problem keeping them working in the future.
Hope that helps your decision-making process.