Toronto is becoming a new superpower as Immigrants choose Canada over the US. Due to the new immigration laws of the US, the silicon valley’s undisputed stand as the number one tech hub might be in danger
In the past few years, thousands of workers are moving to Toronto. This has helped the city become one of the fastest-growing tech hubs. Most of the immigrants are avoiding the US to escape from the rules made by the trump’s administration
Recently, Trump also announces the temporary suspension of US visas. These visas are issued annually to the migrant workers. Every year, the US allocates 85000 visas for foreign skilled workers.
This year with the temporary suspension, Trump’s administration also says that this is indirectly a threat to local job opportunities. Meanwhile, Canada is taking this opportunity to welcome people across the world.
Since 2013, the number of jobs in Toronto is increased by 54%. Several Canadian companies are utilizing this opportunity very well. According to a study in 2016, 25% of the total workers in Canada are immigrant workers.
Recently, US President Donald Trump decided to suspend all the new H1B visas and other work permits. Now the engineers look at Canada after the US suspends the visas. Canada has a more open policy for immigration.
Canada’s staffing firms observed a huge surge in inquiries over the past few weeks. One of the CEO’s of a staffing firm says that the increase in the number of visits to the website and email queries are reportedly high over the past few weeks.
He also says that several companies are also inquiring about their own employees whose situation might be in trouble with the suspensions. Shortly after the US visa suspension is announced, the Immigration Minister of Canada responded to it.
He says that Canada believes that immigration will help them recover better and quickly. He also adds that Canada has a plan to attract the best and brightest talent around the world. Canada also has express entry program and Global Talent Stream to help innovators, engineers, and entrepreneurs.
Canada is also very vocal about encouraging immigration. Earlier to COVID, Canada said that it would like to welcome around 1,00,000 people to become permanent residents of the country between 2020 and 2022. So, now engineers look at Canada after the US suspends visas
Out of the 74,000 permanent residents who came to Canada this year, 24% are Indians. In 2016, 39,705 Indians went to Canada as permanent residents. This number increased to 85,585 in 2019.
The US President Trump plans to sign restriction orders for the H1B visa. This is an executive order which restricts the issuing of new H1B, L1, and other temporary work permit visas. The main motive of this idea is to improve local employment in the USA
Trump believes, by this order, almost everyone in the country will be happy and would welcome this decision. Although he believes that they will always be a few exceptions.
The USA is having many unemployment problems right now. The unemployment rate in the country has risen rapidly due to the coronavirus pandemic. Hence, Trump plans to sign restriction orders for the H1B visa
This move impacts the foreign workers especially Indians who are already scheduled to move to the US from October 1, 2020, once they receive their approval orders. Indians contribute to 70% of 85,000 visas issued every year.
Analysts predict that this move might not affect the people who are already present in the USA currently. This move will affect US tech giants more than that of Indian tech companies. Indian companies started hiring local talent for the last few years opposite the US companies that rely mostly on foreign workers.
In the fiscal year 2019, seven of the top 10 companies that rely on H1B visas are US companies. According to the data from USCIS, the share of Indian companies in H1B visas dropped from 51% to 24% from 2016-19
The unemployment rate for Computer Science in the USA is dropped from 3% to 2.5% from January to May, this year. For other sectors, it increased from 4.1% to 13.5% in the same period.
Recently, in April, Trump signed an order tor restrict Green cards, and some resident permits for a period of 60 days.
The Tech giants started petitioning the US administration, especially Trump that H1B visas are integral for COVID recovery. Companies like Amazon, Google, Accenture, Facebook, IBM are some of the companies to start the petition.
These companies are asking to continue to allow them to hire these highly skilled people. They believe that they are an integral part of the COVID-19 recovery plan for the USA
Advocacy firm ITI, present in Washington said that these big companies are concerned about the news of the suspension of H1B visas. These non-immigrant work visas are in need in these dire times.
The CEO of ITI said that these firms are anxious to get their employees back and the labor market has already started working. He also re-iterated that foreign-born workers are crucial to recovery.
The CEO of the US Chamber of Commerce, Tom Donohue also pointed out to the US government that as the economy bounces back, the American firms need support to meet the needs of their workforce.
US-India business council that has members belonging to HCL, Citi India, Bharat Forge also agreed with Mr.Donohue on this. Mr.Oxman, the CEO of ITI said that the unemployment rate in the software side has decreased from 3% in January 2020, to 2.8% in April 2020
Who benefits from the H1B visas
Indians are the ones who are benefitting the most with the H1B visas. Recently Wall Street Journal published an article that Trump administration will suspend all the new H1B visas. The reasons for this are to control the coronavirus and increase the employment of US-based citizens.
Mr.Donohue says that if companies cannot hire H1B employees, productivity growth will deter. This is especially in the patent production sector. Ultimately this is a great cause for the economic slowdown
He further adds that these short-term restrictions of H1B and L1 visas will have a long term impact on the business plans of the company. Along with H1B visas, these restrictions might apply to H2B visas and J-1 visas which are for short-term seasonal workers and short-term camp counselors respectively.
What does White House think about this?
A White House spokesperson said that the administration is actively evaluating various options, especially to protect American workers. Although no decision is made.
The USA under Donald Trump plans to suspend new H1B visas. Suspension fo new H1B visas will affect the Indian firms in the USA. This could prevent people from coming into the country until the ban is lifted. The move could affect the Indian origin companies as well. In order to handle this, companies like TCS, Infosys will have to hire American citizens to fill the vacant positions.
The people who are already having visas will not be affected by this rule. The Indian IT firms use the H1B visas to send highly skilled people from India to the USA. According to the immigration data, India accounts for 70% of the 85,000 annual limits for the H1B visas issued.
Recently the rejection rates for the Indian firms for H1B visas have raised from 5% in 2015 to 24% in 2019. On Friday, NASSCOM said that they seek exemption for the technology workers from any restrictions being imposed.
For most companies, the US is the main market for its revenue. For example, TCS which operates in 50 countries, has the s their biggest revenue generator. Tata Sons chairman said during the annual shareholders meeting that these visa restrictions continue to evolve timely and TCS has the responsibility to comply with these situations.
For major IT companies, 60-65% of the total operating costs will be of staff costs only. If these companies are going to hire the local talent, who costs more than the H1B visa individuals, the company’s operating margin might decline by 30-80 points, according to a report by CRISIL.
In FY20, Infosys has hired around 78% of its senior management in the USA locally. In the Annual sustainability report, Infosys said that it is looking to strengthen the local hiring and continue to increase the senior management proportion with the local talent.
Also, several industry analysts feel that hiring local talent is one way to handle these H1B visas suspension. However, most of them believe that the ill always welcome great talent to come and work in their country.
Most of the companies feel that these new restrictions by the US government will bring their projects to a halt and affect their revenue if they couldn’t hire the local talent.