Faced with restrictive quotas for high-skilled foreign workers, US employers are increasingly moving workers abroad to retain key talent.
93 percent of companies that responded to a survey on trends in labor migration expect they will turn to offshoring or nearshoring of talent – moving employees abroad or to a country – this year due to a combination of immigration restrictions and job requirements nearby country.
According to the survey by immigration service provider Envoy Global Inc., Canada is the top destination for relocating foreign workers, with 62% of responding companies posting workers there. It is followed by Mexico and the United Kingdom (48%) and Germany (31%).
In most cases, the move is the result of difficulties in obtaining a work visa. More than eight in 10 employers lost a foreign worker in the past year because they were unable to obtain an H-1B or other employment-related visa.
“There is an ongoing frustration with the limited viability and challenge of obtaining a visa,” said Dick Burke, President and CEO of Envoy Global. “They are pursuing the next best alternative, which is overseas.”
The online registration period for H-1B visas for specialty occupations opened last week, a first step before the U.S. Citizenship and Immigration Services will hold a lottery for the 85,000 visas available for fiscal year 2024.
Demand for foreign workers with science, technology, math and engineering skills has continued to grow across the economy, well exceeding this annual ceiling.
At the same time, many companies are adapting to hybrid and remote work to retain top talent.
“The confluence of these factors” — immigration difficulties and the rise of telecommuting — drove the rise in offshoring plans, Burke said.
New international graduates with STEM degrees from US colleges and universities can work for up to three years on an F-1 student visa through a program called Optional Practical Training. The program allows these graduates to stay and work in the United States while attempting to get an H-1B.
When a freshman has run out of immigration opportunities after multiple attempts at the H-1B visa lottery, relocating to Canada has become a top fallback option for employers, said Jennifer Behm, an attorney with Berardi Immigration Law.
Such nearshoring was already child’s play for large, multinational corporations, but is also attracting increasing interest from smaller and medium-sized companies.
“If we’ve seen new interest, it’s been the mid-market companies, not the giant conglomerates or multinationals,” Behm said. “We’ve successfully made it work for companies that only operate in the US.”
Canada is attractive because of its proximity and similar time zones. It also offers a more worker-friendly immigration system, including instant work permits for spouses and a faster route to permanent residence, she said.
Moving Services Industry
There hasn’t been a massive shift toward moving workers overseas, but companies that do are finding it easier, said Davis Bae, co-chair of the immigration practice group at Fisher & Phillips LLP.
“Are people more interested in it now? Just because there are more resources,” he said.
Smaller companies with no overseas operations turn to professional employers’ organizations (PEOs) for human resources and compliance services when faced with the loss of a skilled expatriate worker. The PEO acts as the employer of record in a country like Canada, so companies don’t have to set up their own branches outside of the US.
Under this agreement, relocating an employee to Toronto or Vancouver costs a fraction of what it would cost to replace them with a new employee, said Marc Pavlopoulos, founder and CEO of PEO Syndesus Canada Inc.
The company employs about 200 people for US companies in Canada, about 90% of whom relocated after losing the H-1B lottery. Pavlopoulos works with smaller US tech companies looking to grow while working towards Canada’s goal of adding 500,000 immigrants per year by 2025.
“The Canadian Dream is good,” he said. “You keep your cool job and you’re on your way to getting a Canadian passport.”