US employers are increasingly relocating employees abroad to hold onto key talent in the face of restrictive quotas on high-skilled foreign workers.
Ninety-three percent of companies that responded to a survey of workplace immigration trends say they expect this year to turn to offshoring or nearshoring talent—transferring employees overseas or to a nearby country—because of a combination of immigration restrictions and labor demands.
Canada is the top destination to relocate foreign workers, with 62% of responding companies sending workers there, according to the survey produced by immigration services firm Envoy Global Inc. It was followed by Mexico and the United Kingdom (48%) and Germany (31%).
In most cases, the move is the result of challenges securing a work visa. More than eight out of 10 employers lost a foreign employee in the past year because they were unable to secure an H-1B or other employment-based visa.
“There’s a continued frustration with the finite viability and challenge of securing a visa,” said Envoy Global President and CEO Dick Burke. “They’re pursuing the next best alternative, which is overseas.”
The online registration period for H-1B specialty occupation visas opened last week, a preliminary step before US Citizenship and Immigration Services holds a lottery for the 85,000 visas available for fiscal year 2024.
Demand for foreign workers with skills in science, technology, mathematics, and engineering has continued to grow across the economy, far outstripping that annual cap.
At the same time, many companies are becoming more comfortable with hybrid and remote work to keep top talent.
“The confluence of those factors"—immigration difficulties and the rise of telework—drove the increase in offshoring plans, Burke said.
Recent international graduates with STEM degrees from US colleges and universities can work for up to three years on F-1 student visas under a program called Optional Practical Training. The program allows those graduates to remain and work in the US while trying their hands at getting an H-1B.
When an early-career worker has run out of immigration options after multiple attempts at the H-1B visa lottery, relocating them to Canada has become a top fallback option for employers, said Jennifer Behm, an attorney at Berardi Immigration Law.
Such nearshoring was already a “no brainer” for large, multinational corporations, but it’s drawing increasing interest from smaller and midsize firms as well.
“When we’ve seen new interest, it has been the medium size firms, not the enormous conglomerates or multinationals,” Behm said. “We’ve successfully made it work for companies who only have US operations.”
Canada is attractive because of its close proximity and similar time zones. It also offers a more worker-friendly immigration system, including immediate work permits for spouses and a quicker pathway to permanent residency, she said.
Relocation Services Industry
There hasn’t been a massive shift toward relocating workers abroad, but companies that do so 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? Only because there are more resources,” he said.
Smaller companies without operations abroad have been turning to professional employer organizations (PEOs) for human resource and compliance services when they face losing a skilled foreign worker. The PEO serves as the employer of record in a country like Canada so companies don’t have to establish their own offices outside of the US.
Under this arrangement, paying to relocate a worker to Toronto or Vancouver costs a fraction of what it would cost to replace them with a new employee, said Marc Pavlopoulos, the founder and CEO of PEO Syndesus Canada Inc.
The company employs about 200 workers for US companies in Canada, roughly 90% of whom relocated after losing out on the H-1B lottery. Pavlopoulos works with smaller US-based tech companies that are seeking to grow, while also working toward a Canadian goal of adding 500,000 immigrants per year by 2025.
“The Canadian Dream is a good one,” he said. “You get to keep your cool job and you’re on your way to getting a Canadian passport.”
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