Over the past week, President Trump has sent shockwaves through the tech industry with the signature on his travel ban executive order and the leak of a new executive order targeting the H-1B and L1 Visas. The immediate backlash from tech companies, including Uber CEO Travis Kalanick removing himself from Trumps economic advisory group and statements of opposition to the ban from Jeff Bezos, Tim Cook, and Sergi Brin to name a few. The travel ban has been deemed unconstitutional by a federal judge in Washington State, where tech giants Facebook, Microsoft, Apple Twitter and over 90 other companies filed an amicus brief opposing the executive order in hopes to scrap the order permanently. The ripple effect of the executive order has a global impact for multinational enterprises from Silicon Valley to India based IT mega firms like TCS, Infosys, and Wipro, who generate about 60% of revenues from US outsourced IT services.
These major tech companies cite the following in opposition to the travel ban as well as the reconfiguration of the Visa programs "the Order inflicts significant harm on American business, innovation, and growth.” The brief also cites the following "The Order makes it more difficult and expensive for U.S. companies to recruit, hire, and retain some of the world’s best employees. It disrupts ongoing business operations. And it threatens companies’ ability to attract talent, business, and investment to the United States."
So what is an H-1B Visa and why is it important?
The H-1B Visa is a non-immigrant visa that allows US companies to temporarily employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields. Typical specialized areas include computer programming, biotechnology, chemistry, architecture, engineering, and mathematics mostly S.T.E.M. fields. Technology companies depend on this program hire thousands of employees each year, TCS, for example, applied for 4,000 visas in 2016.
A common myth is that H-1B workers impact unemployment rates. Unemployment rates in sectors like STEM, which use H-1B Visas are much lower than national averages which mean the demand for specialized workers is higher than the supply of people in the existing workforce. Also, the increase in H-1B Visas has a direct correlation to an increase in GDP. According to the American Immigration Council "Research indicates that an increase in H-1B Visas could create an estimated 1.3 million new jobs and add around $158 billion to Gross Domestic Product in the United States by 2045." First referred to by President John F Kennedy that a rising tide lifts all ships, I am not saying that growth will automatically raise everyone but rather point out that an economic policy that has a shared vision of prosperity in global markets that are interdependent can lead to a larger global consumer base for US products abroad.
When asked about the leaked H-1B Visa executive order White House Press Secretary Sean Spicer commented, "I think with respect to H1Bs and other visa is part of a larger immigration reform effort that the President will continue to talk about through executive order and through working with Congress".
The uncertainty of the Trump administration position spurred tech companies to look to our neighbor to the North, Canada where Prime Minister Justin Trudeau Tweeted the following just hours after the travel ban was signed. "To those fleeing persecution, terror & war, Canadians will welcome you, regardless of your faith. Diversity is our strength #WelcomeToCanada". Some of the larger companies like Microsoft and Amazon already have operations in Vancouver, BC where they can filter foreign works through but what options are there for more nimble organizations with fewer resources available?
I spoke with a company called TPD, a diversity certified organization, which provides HR solutions including cross-border services and contractor payrolling for US based tech companies. TPD facilitates American organizations to contract with Canadian residents without needing a physical entity in Canada. See Canada already has a bevy of tech talent from Vancouver to Montreal and the foreign exchange rates make it appealing for US-based organizations to hire Canadians ($1USD = $1.30 CAD). TPD supports one of its Silicon Valley based software clients by sourcing tech talent in Canada that meet their stringent criteria, once the client has selected those individuals they feel will be the best fit they become TPD employees. So TPD becomes the employer of record and is responsible for payroll, benefits administration, onboarding, offboarding, etc. This process allows smart, nimble organizations to leverage the current FX rates to their advantage as well as working with excellent talent in North America.
"For many years, TPD has offered its clients payrolling services on either side of the border. The flexibility to operate in another country without having to deal with the requirements that come with being an employer in a foreign country enables some of our clients to focus on building their business, while TPD takes care of the administrative aspects. Currently, we’re dealing with a lot of interest from Tech companies looking to leverage a Canadian based pool of talent," stated Paul Tournier President of TPD.
So with all of the uncertainty playing out in the federal courts on the Trump travel ban, and the leak of the H-1B executive order only time will tell if Trump's protectionist view of immigration and economic policy will yield the results he is looking for. As a former business owner, if I were in this dilemma, I would be looking to acquire and retain my best assets, my people as fast as possible to mitigate the risk of any unforeseen production gaps.