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Four questions companies using the H-1B visa program need to ask

Changes to the US H-1B visa program are making it harder for American tech companies to recruit and retain global talent. What are the alternatives?

It’s no secret that tech companies are having a harder time than ever attracting highly skilled talent. Global talent shortages have made recruitment a high-stakes competition that could mean the difference between success and failure, especially for scaling companies.

COVID-19 just exacerbates the problem.

In the United States, the H-1B visa program provides the best path for tech companies looking to recruit the world’s best talent. While that’s still true, it’s becoming more and more difficult for companies to rely on the H-1B visa program due to higher expenses, a more onerous application process and a much lower acceptance rate.

Tech CEOs are starting to ask hard questions about whether relying on the H-1B visa program is hindering their company’s ability to grow.

This post answers four H-1B questions every US tech company searching for highly skilled talent should ask.

But first, what is the H-1B visa program?

The H-1B visa allows companies located in the US to employ foreign workers in specialty occupations that require technical expertise in fields like information technology, finance or engineering. This program permits the visa holder to stay in the US for three years and apply for an extension of an additional three years. Workers cannot apply directly for an H-1B visa – an employer needs to apply on their behalf. Due to immense demand for foreign talent, and a hard cap on the number of new visas per year, H-1B visas are granted via lottery.

Simple, right? It sounds great, except for the cap on new visas, the lottery, and the uncertainty that comes along with both. In 2017, US Citizenship and Immigration Services reported that more than 35,000 applications were rejected. That’s 35,000 job offers to top candidates that weren’t accepted due to immigration barriers. While a global tech giant like Google or Microsoft might be able to weather losing access to key talent, missing out on five or six top candidates with specialized skills or knowledge can be disastrous for a scaling company.

Even worse, more than 10,000 of those rejections were for workers who were already employed in the United States, which means many scale-ups are losing employees who have a worked for their company for three years. Imagine losing a key member of your team during a vital expansion of your business.

It’s time to start considering other options for growing your business. Here are four questions the recent changes to H-1B should make every company ask:

1. How will changes to the H-1B visa program affect my company?

The Trump administration has made immigration reform a central policy, including a recent promise to consider reforms work-related immigration programs in the wake of massive job losses following COVID-19.

But this was a story even before coronavirus. According to data from US Citizenship and Immigration Services, 25% of new and continuing applications for H-1B visas were declined in the last three months of 2018. For comparison, in 2014, just 5% of applications were rejected. An article from Recode suggests that an executive order from President Trump has a lot to do with this change.

The article from Recode also reports that the process to apply for an H-1B has become more onerous, uncertain and expensive, and that 60% of applications in Q4 2018 required extra paperwork (double the rate from Q4 2016). An article in Forbes even suggested that the US Department of Labour made changes to the H-1B form specifically to punish tech companies.

For scaling companies, one more concern comes from the variation in H-1B application success rates among different types and sizes of business. For example, tech giants like Microsoft, Apple, Google, Intel and Facebook had a 99% success rate in 2018, while hiring large volumes through the H-1B program. If the average success rate is approximately 80%, then many smaller businesses – the ones that have hundreds rather than tens of thousands of employees – are likely out of luck.

To summarize, fewer companies are getting H-1B visas, the application process has become more onerous and expensive, and bigger companies tend to have more success. If you’re a scaling tech company, this all adds up to more barriers to growth.

2. What are other companies doing to recruit foreign tech talent?

Moving to Canada. In fact, a new Envoy Global survey of more than 400 US hiring professionals has found that tech companies are choosing to expand to Canada to take advantage of much more favourable immigration policies. In fact, 63 percent of respondents to the survey are already increasing their presence in Canada.

It makes sense. We share time zones. Connectivity is great – daily flights go from Canada’s international airports to anywhere in the United States. Culture is similar, and the currency exchange rate can give American companies an additional advantage.

It also helps that the process to get proper visas and permits is much shorter in Canada. Another article from Recode highlights the story of a machine learning specialist from India who knew the H-1B process could take six months or longer, while the entire process in Canada – from job offer to arrival in Toronto – took less than two months. The Global Talent Stream program can be even quicker. For this reason, Canada has become a top choice for foreign nationals looking for high-tech job opportunities.

3. What is Canada’s Global Talent Stream program?

The Global Talent Stream is Canada’s version of the H-1B program. It expedites the immigration process for highly skilled workers – a permanent resident visa and work permit can be approved in as little as two weeks.

Talent must fit in one of two categories. The first covers sales, marketing and administrative jobs, and the second covers technical positions like software developers, designers and engineers. The program is limited mostly to those disciplines that fuel growth in tech – for example, local companies have used the Global Talent Stream for hiring data scientists, hologram engineers, experts in artificial intelligence and robotics.

So far the feedback has been great – businesses love this program.

4. What else should my company consider when trying to recruit foreign tech talent?

Expanding to another country to improve access to international talent can have a knock-on effect for other parts of your business. First, expansion to a new location can mean significant cost savings. For example, smaller centres like Waterloo can offer exceptional value for money than larger tech havens like Silicon Valley or Boston can’t match.

The average lease rate in Waterloo is 84% less than San Francisco. Likewise, due to the much lower cost-of-living, wages for top talent are more competitive than North America’s major cities without sacrificing quality of life for employees.

Second, while international recruitment has an important role to play in growing a company, it is only one piece of a strong talent strategy. Expansion to a new community affords the opportunity to access local universities and colleges as a source of talent and research capacity. If you run a tech company looking to expand somewhere other than the United States, why not locate in Waterloo next to one of Silicon Valley’s top recruitment universities?

Interested in growing your business in Canada?

Our complimentary services can make it easier for your company to land in Waterloo, including making connections with local business leaders, helping identify real estate opportunities and more. As an official referral partner, we can also answer your questions about the Global Talent Stream program.