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Looking beyond COVID-19 and U.S. election: Nearshoring IT talent in Canada

Monday, November 16, 2020 @ 1:26 PM | By Rakhmad Sobirov

Rakhmad Sobirov %>
Rakhmad Sobirov
By definition, nearshoring is “a form of offshoring and describes transferring work to another country geographically close to your home country to reduce costs and increase work, travel and communication quality.” (InterVenture Sourcing AG) Thanks to the U.S. immigration restrictions, we could expand the definition and add: “and overcome immigration hurdles.”

There could be a long debate about nearshoring vs. total offshoring, but in our context, nearshoring foreign IT talent in Canada has many distinct advantages other than time zone proximity, English language and cultural similarities, such as:

  • Political parties of all stripes in Canada welcome immigration.
  • Nearshoring in Canada makes your staff and your company “trade war and sanction-proof.”
  • Your talent nearshored in Canada will have peace of mind and be more productive as their immigration trajectory becomes predictable. They could become permanent residents in Canada and stay loyal to your company.
  • Employee work satisfaction can increase as your nearshored employees could bring their family to join them in Canada and enjoy social benefits offered in Canada.
  • In the long term, once your nearshored talent becomes Canadian citizens, you could potentially bring them back as NAFTA-professionals to the U.S., if necessary. In the meantime, with their permanent resident status in Canada, your talent can easily travel to the U.S.

There are already companies in Canada offering creative solutions for H-1B visa holders in the U.S.

The U.S.-based company basically “fires” (i.e. releases) the H-1B holder, a Canadian company hires that H-1B holder and brings him/her to Canada within 1-1.5 months on a work permit and arranges that the same U.S. company rehires the employee on an exclusive basis. The talent works at one of the company’s offices located across Canada that essentially cover all time zones in the continental U.S.

It’s a win-win-win-win scenario for all four parties involved: (1) the U.S. company retains its valuable employee, although under different arrangements; (2) the employee gets a stable job and immigration status in Canada; (3) the Canadian company profits by offering “the H-1B solution” and (4) Canada gains by attracting educated and experienced talent who can potentially become permanent residents and citizens.

Relocating to Canada but still serving U.S.-based clients

The last, but not the least solution is relocating the entire team and company from the U.S. to Canada.

Besides many incentives and support by the Canadian government, relocating to Canada could resolve potentially all immigration-related issues for the company once and for all. Of course, many legal aspects and tax considerations should be taken into account, but becoming a totally Canadian company serving U.S.-based clients could bring such benefits as market access through free trade agreements of Canada with the EU, Latin America and Asian countries.

This solution may not be suitable for all companies; however, IT companies from the U.S. should consider it as a long-term option.

Canada, in turn, should consider becoming an even more attractive jurisdiction in terms of taxation, privacy and data protection and liberalization of telecom and Internet services.

Main takeaway

Going back to the real-life scenario we used in the first article in this series, U.S.-based IT companies could consider each of the solutions separately or in combination. A hybrid model combining one or more solutions could, depending on the citizenship of the H-1B visa holders, work just fine. A more granular analysis would be necessary to assess on a citizenship-by-citizenship basis.

In short, the solution to the H-1B or similar visa restrictions faced by U.S.-based IT companies does not solely depend on the outcome of the 2020 U.S. presidential election. The companies must look beyond the election and most importantly beyond the COVID-19 pandemic. They should look north!

This is the second of a two-part series. Read part one: Beyond COVID-19 and the election: Canadian immigration solutions for U.S.-based IT companies.

Rakhmad Sobirov is the managing lawyer of Sobirovs Law Firm, where his team helps IT companies from around the world to choose Canada as their hub and strategically place their teams in Canada to serve the US and the LatAm markets.

Photo credit / ConceptCafe ISTOCKPHOTO.COM

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