The Reason US Companies Are Moving Tech Jobs To Canada

Is the US beginning to lose the war for talent? JL

Rani Molla reports in Re/code:

US companies keep hiring foreign tech workers. For  US companies that means expanding operations in Canada, where hiring foreign nationals is much easier. 63% of employers are increasing their presence in Canada, either by sending more workers there or by hiring foreign nationals there. More than half did both. Toronto ranked No. 4 last year, just behind San Francisco, Seattle, and Washington, DC, as a top location for tech workers. It also created more new jobs than those three cities combined. Ottawa saw the fastest percentage growth in tech employment of any city in the US or Canada.

US companies are going to keep hiring foreign tech workers, even as the Trump administration makes doing so more difficult. For a number of US companies that means expanding their operations in Canada, where hiring foreign nationals is much easier.

Demand for international workers remained high this year, according to a new Envoy Global survey of more than 400 US hiring professionals, who represent big and small US companies and have all had experience hiring foreign employees.

Some 80 percent of employers expect their foreign worker headcount to either increase or stay the same in 2019, according to Envoy, which helps US companies navigate immigration laws.

That tracks with US government immigration data, which shows a growing number of applicants for high-skilled tech visas, known as H-1Bs, despite stricter policies toward immigration. H-1B recipients are all backed by US companies that say they are in need of specialized labor that isn’t readily available in the US — which, in practice, includes a lot of tech workers.

Major US tech companies, including Google, Facebook, and Amazon, have all been advocating for quicker and more generous high-skilled immigration policies. To do so they’ve increased lobbying spending on immigration.

Canadian Prime Minister Justin Trudeau announced a new Amazon Vancouver office on April 30, 2018.

Jeff Vinnick/Getty Images

CompeteAmerica, a pro-immigration coalition of employers whose members include Amazon, Google, and Microsoft, wrote to Homeland Security last fall saying that Trump’s immigration policies were bad for business and their employees.

Business Roundtable, an association of top US CEOs that includes Amazon’s Jeff Bezos, Apple’s Tim Cook, and IBM’s Ginni Rometty, expressed a similar sentiment in a letter to Homeland Security last year.

“Due to a shortage of green cards for workers, many employees find themselves stuck in an immigration process lasting more than a decade. These employees must repeatedly renew their temporary work visas during this lengthy and difficult process,” the group wrote in August. “Out of fairness to these employees — and to avoid unnecessary costs and complications for American businesses — the US government should not change the rules in the middle of the process.”

So far, these efforts haven’t accomplished much.

Recent immigration data shows the US is issuing fewer total visas to these types of workers than in previous years. This is a result of an executive order Trump issued in 2017 to review the H-1B process and make good on his pledge to “Hire American.”

It’s also made the whole process of sourcing these workers much more difficult, which in turn makes the hiring process more expensive. Some 60 percent of applications required additional paperwork in the last quarter of 2018, twice as much as two years earlier.

For the most part, the reason US companies are hiring international tech labor is because there aren’t enough skilled Americans to do that work.

This is a systemic problem that has its roots in a lack of pertinent science, or STEM, education. Indeed, the number of STEM job openings outpaces the number of unemployed STEM workers, according to a report by the New American Economy, a bipartisan business coalition launched by Michael Bloomberg and Rupert Murdoch. The organization found that 23 percent of all STEM workers in the US are immigrants.

Our loss is Canada’s gain

To get the tech talent they need, US companies are hiring outside the US, with Canada being a common choice.

Sixty-three percent of employers surveyed in the Envoy study are increasing their presence in Canada, either by sending more workers there or by hiring foreign nationals there, according to the Envoy survey. More than half of those did both. Another 65 percent of hiring professionals said Canada’s immigration policies are more favorable to US employers than US policies.

Of those surveyed, 38 percent are thinking about expanding to Canada, while 21 percent already have at least one office there.

And Canada has become a more obvious choice for foreign nationals in the first place.

Kollol Das, a former electronic engineer and gaming startup founder from India who now specializes in machine learning, was offered two high-skilled tech jobs last fall, one based in New York and one based in Toronto.

He immediately chose the latter.

The H-1B process in the US could have taken six months or longer, while the entire process in Canada — from being offered the position to moving to Toronto — took him less than two months. The visa portion of the process took about a week.

“The fact that the whole process is so long made it so that I didn’t even think further ahead,” said Das, who is currently a research lead at Sensibill, a Toronto-based financial services company that uses big data. Had the immigration process been the same? “Then I might have looked more at the kind of role I’d have in each place.”

Canada has weathered similar high-tech worker shortages to the US, but its response has been to welcome immigrants with relatively open arms. Its immigration minister announced last year that Canada would increase the number of immigrants it accepts each year by 40,000, for a total 350,000 in 2021.

Its Global Skills Strategy program — Canada’s equivalent to the H-1B — expedites the immigration process for high-skilled workers to just two weeks or less. Last year, the program brought in more than 12,000 workers, approving 95 percent of applicants. A quarter of those came from India and another quarter came from the US.

Such policies have been a boon for Canadian tech companies.

“I was a serial entrepreneur and I spent most of my career watching a brain drain from Canada,” said Yung Wu, the CEO of MaRS Discovery District, a tech-innovation hub based in Toronto that includes 1,300 entrepreneurial ventures. “This is the first time in my career I’ve seen a brain gain.”

As a result, Wu said MaRS companies saw a more than A 100 percent increase in jobs created in 2017 compared to 2016 — and a nearly 200 percent increase in revenue, for cumulative sales of $3.1 billion. “There’s a really strong correlation between talent and innovation,” Wu said.

Perhaps it’s not surprising, then, that Canada has become a major tech hub. Toronto ranked No. 4 last year on CBRE’s tech talent list. That put it just behind San Francisco, Seattle, and Washington, DC, as a top location for tech workers. It also created more new jobs than those top three cities combined.

Another Canadian city, Ottawa, saw the fastest percentage growth in tech employment of any city in the US or Canada.

CBRE, a real estate firm, does this annual report precisely because the location of tech talent dictates so much of the economy — including where companies locate their offices and invest capital.

Immigrants are an integral part of that talent.

“Immigrants create jobs; they don’t take away jobs,” Wu said. “America’s loss right now is Canada’s gain.”