Thursday, July 19, 2007

Near-Shoring: Canada's Best Hope for Technology Growth?

Almost two weeks ago, Microsoft announced that it would open a development center in Vancouver. The purpose? To attract and retain skilled foreign-born developers who are hampered by restrictions on work visas in the US. Ask anyone who has struggled to get ahold of one of the handful of H1B visas made available each year, and they'll tell you how hard it is to work in the United States in the current environment.

A colleague in California believes that this is the next great opportunity for Canada's technology community. Stop sending me Ernie Eves, he says, and start sending incentive packages that will attract similar businesses to Canadian centres like Toronto.

The opportunity for Canada is compelling, he says. In the US, immigration reform is dead until 2009, after the next presidential election. Which means that for the next two years at least, the influx of foreign workers to the US will be limited to 65,000 or less. Further,the more than 550,000 foreign students who are graduating from the US' leading institutions such as Stanford and MIT will find it hard to stay and work there. That's a locally-trained talent pool waiting to be tapped by a more immigration-friendly country like Canada.

There also are other factors which may continue to limit access to foreign technology talent in the US. Most notably, the US Department of Defense and the Commerce Department have introduced broad restrictions on the ability of foreign students to participate in federally funded research projects that relate to sensitive areas. The US government has gone so far as to propose that disclosure by American porfessors of certain kinds of research and information to foreign born students may be a deemed export of technology in contravention of US export controls laws. While institutions such as MIT have strongly opposed these controls on research and innovation, few doubt these will be part of the innovation fabric of the US for the forseeable future.

What does this mean for Canada? As my Californian friend points out, there is a tremendous appeal to "near-shoring" some US operations to Canada instead of offshoring them to different time zones. Can we capitalize on Microsoft's move and create a trend? Where are the economic development wonks when we need them?

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