CANADA-UNITED STATES: Tech, Talent, and Immigration [Updated: November 19, 2019]

April 5, 2019

As highly skilled immigration cools in the U.S. and heats up in Canada… Canada’s Global Talent Stream becomes permanent.

By Kent O’Neil

While geographic neighbors, but with currently two seemingly divergent approaches to immigration – Canada and the United States have developed an almost symbiotic relationship in the international labor market. With the perceived and actual cooling of the United States’ openness to immigration under the Trump administration, Canada appears more than happy to benefit. As foreign talent increasingly flows away from the U.S., it is increasingly flowing to Canada – with resulting positive effects in the Canadian technology industry.

Cooling Immigration Climate in the U.S.

While U.S. President Donald Trump’s plans for a physical southern border wall have grabbed most of the headlines, marked increases in denials and delays of H-1B visa applications have subtly erected a de facto barrier around the country to skilled foreign labour. U.S.-based tech companies have continually decried that Trump administration immigration policies are hampering their businesses by making it harder to recruit necessary foreign talent.

According to U.S. Citizenship and Immigration Services (USCIS) figures, “initial denials” of H-1B applications doubled in fiscal year 2018, and “requests for evidence” issued on H-1B applications jumped by 75 percent over the previous year. That trend appears only to be continuing into FY2019 – with initial denials in the first quarter up almost 50 percent over the same period last year.

Looking at the numbers in the reverse, overall approval rates for H-1B applications are still at around 85 percent, but that represents a decrease from the 96 percent approval rate of just three years previous. Large tech employers continue to report approval rates of their applications for higher skilled applicants at almost 99 percent. However, many companies recruiting in other industries, especially outsourcing, are reporting far lower approvals than experienced in previous years.

Contributing to the cooling is also a huge bottleneck in the U.S.’s permanent residence (green card) system. Because of yearly individual country caps, H-1B visa holders from certain nations can now face decades-long wait times for green cards. Official estimates indicate that more than 600,000 Indian nationals in the U.S. on various visas are waiting in the queue for green cards. A 2018 CATO Institute analysis estimated that the current employment-based green card wait time for an Indian national with a bachelor’s degree is 17 years. Indians with advanced degrees currently face a staggering 150-year wait.

Adding further to that sense of cooling is the pending proposed regulation to eliminate the H-4 EAD rule, which allows spouses of H-1B visa holders to work in the U.S. In February, USCIS issued its proposal to remove “H-4 dependent spouses from the class of aliens eligible for employment authorization.” The proposal is currently pending with the Office of Management and Budget (OMB), and publication in the Federal Register is expected in the next several weeks, with implementation later this year after a public comments period.

While the U.S. remains a preferred destination for highly skilled talent around the world, all of this has caused both foreign nationals, and the companies that employ them, to look beyond the United States.  Companies in many sectors that rely heavily on highly skilled foreign talent are choosing to expand operations in countries with more accommodating immigration policies.

Tech Industry in Canada Heating Up

Case in point is in the technology industries. With the cooling immigration climate in the U.S., Canada is benefiting, with its tech industry noticeably heating up. Many highly skilled foreign nationals are moving to Canada after struggling to obtain H-1B visas or green cards in the U.S. – or simply foregoing job offers in the U.S. in favor of more certain offers to live and work in Canada. Recognizing this, tech companies are scaling up operations in Canada to take advantage of a seemingly more user-friendly immigration system.

Canadian cities, Toronto and Vancouver, now regularly make global top ten lists of most attractive and fastest-growing tech hubs. Other cities – like Montreal, Ottawa, Waterloo, and Calgary – are also experiencing rapid growth in tech-related jobs. Both established players and entrepreneurial start-ups are increasingly choosing to operate in Canada’s growing tech ecosystem. Homegrown tech companies like Shopify, Hootsuite, and Kik have become heavy hitters globally. Microsoft, Amazon, Google, and Facebook all have large and expanding operations in Canada.

A recent study by global real estate firm CBRE Group found that Canada added 57,600 new tech jobs in 2017 alone. That same study found Toronto to be the fastest-growing tech market in North America – adding 22,500 new technology jobs in 2017, almost twice the number added by San Francisco over the same period. In a follow-up study for 2018, CBRE found Toronto continued to grow its tech talent pool at a rate of 54 percent. Eleven percent of the labor market in Ottawa is now made up of tech workers.

The rapid growth in the tech industry in Canada is likely due to a combination of factors – i.e. economy, local workforce, lower costs of living, and high lifestyle satisfaction. However, certainly among them is Canada’s supportive immigration system.

Canada’s Global Talent Stream and Global Skills Strategy

In June 2017, the Government of Canada launched a two-year pilot program of its Global Talent Stream within Canada’s Temporary Foreign Worker Program (TFWP). The new immigration stream was expressly designed to give companies located in Canada faster access to highly qualified foreign talent. Companies that qualify for the program benefit from two-week fast-tracked processing of TFW visas for designated highly skilled occupations. Occupations eligible for the program include highly skilled and highly compensated positions in the sciences, engineering, and technology.

The Canadian government’s 2019 budget, announced on 19 March, contains numerous investments aimed at further supporting Canada’s growing technology sectors – including an ongoing annual $7.4 million allocation to make the Global Talent Stream permanent.

Since its initial announcement in the government’s 2016 Fall Economic Update, the clear intent of its Global Skills Strategy and the Global Talent Stream has been to position Canada as a premier destination for international business by making it faster for national and multinational companies to grow their operations in Canada – especially in the innovation and technology industries.

The idea is that through encouraging highly skilled foreign talent to immigrate to Canada, their contributions to business expansion will in turn create more jobs for Canadians. While it is likely too early to look at concrete numbers, the anecdotal evidence from Canada’s fast-growing tech sectors suggests the strategy is working. Compared to the U.S.’s typical 6+ months processing times for H-1B visas, tech CEOs call the two-week processing times for Global Talent Stream visas a “game changer” for their industry.

UPDATE 11-19-19: Set to expire as a pilot program in June 2019, the Global Talent Stream has continued as a regular immigration program, and the list of eligible occupations was expanded to take in a number of additional tech occupations in July.

Companies with operations in both the U.S. and Canada are strategically using the Global Talent Stream both as a permanent and temporary solution to the immigration challenges in the U.S. Some companies have chosen to hire foreign employees and initially locate them at their Canada location while waiting on the slower H-1B process in the U.S. Other companies have hired foreign employees in Canada through the Global Talent Stream and after a year with the Canadian company, utilized intra-company transfers under NAFTA/USMCA to assign them to an affiliate in the U.S. Others have simply chosen to forgo the U.S. option altogether and ramp up operations in Canada.

With the Global Talent Stream now becoming permanent, Canada immigration will continue to remain a strategic option to the tightening immigration environment in the U.S. As companies increasingly invest in facilities and resources in the Canadian tech ecosystem, Canada’s attractiveness as a technology hub increases as well, for reasons in addition to immigration. So in the current immigration climate, the U.S.’s loss is Canada’s gain.

Expanding Your Business in North America?

For businesses both large and small looking to expand in North America – immigration needs to be an integral part of your strategic planning. Immigration law and policy can have a huge impact on your ability to access the needed talent, especially in the ultra-competitive science, technology, and innovation fields.

The U.S. will continue to present one of the most attractive business destinations in the world for a myriad of factors. However, current developments on the immigration front are certainly making it more challenging. For this reason, Newland Chase takes a comprehensive, strategic, global approach to corporate immigration. Just as modern business now takes place on a global scale, workforces and immigration must be examined with a global perspective. Closing doors in one country can oftentimes be overcome by effectively utilizing doors opening in another country.

For an overview of Newland Chase’s capabilities in Canada, visit our Canada Immigration Services page. With offices in Calgary, Montreal, Ottawa, Toronto, and Vancouver – our Canada team has been supporting Canadian and multinational companies in a broad range of industries for more than 20 years.

Newland Chase, a wholly owned subsidiary of CIBT, is the leading global provider of immigration and visa services for corporations and individuals with over 1,700 expert immigration and visa professionals, attorneys and qualified migration consultants located in over 70 offices in 25 countries.

This publication is not intended as a substitute for legal advice.  Readers are reminded that immigration laws are subject to change. We are not responsible for any loss arising from reliance on this publication. Please contact Newland Chase should you require any additional clarification or case specific advice.