15 June 2018

The open secret to Canada’s tech boom


Cities around North America are waiting with bated breath as Amazon decides where to place its second headquarters. “HQ2” will be a $5 billion facility, generating 50,000 high-paying jobs.

On the shortlist of 20 locations there’s just one non-US city: Toronto, Canada.

The tech scene north of the border is quietly booming. In 2016, the Toronto region added more jobs in technology than New York City and the San Francisco Bay Area combined. It already has a major AI research centre, Google’s Sidewalk Labs and Thomson Reuters’ new tech hub.

Over in the west, Vancouver’s tech sector now employs 92,000 people, and Amazon is planning to bring 3,000 new tech jobs to the city by 2022. It is also home to Hootsuite, a social media management platform which has millions of users around the world.

So how has Canada fuelled this growth? Where could they possibly find such large numbers of highly-skilled, entrepreneurial workers?

The answer, unsurprisingly, is immigration.

Immigrants in Canada make up around 20 per cent of the population but fill half of all STEM (Science, Technology, Engineering and Maths) jobs. Over the past few years, tech firms have seen their international job applications double or even triple, as the tech boom creates thousands of vacancies.

Workers from the United States to India are taking note of Canada’s rise, and the Canadian government is doing their best to attract them.

Through the Express Entry visa, a points system introduced in 2015, Canada hopes to welcome a quarter of a million skilled workers from 2018 to 2020. Meanwhile, the new global skills visa programme means that fast-growing firms can bring in international workers within just two weeks. In its first ten weeks, the fast-track visa brought 1,600 high-skill tech workers to the country.

Canada’s open immigration policy is in stark contrast to the US, where H-1B visas for skilled workers – which were already very restrictive – have been under attack by President Trump. He is trying to slash numbers, pile on extra bureaucratic requirements, and block extensions for thousands of skilled workers in the country. Even before this, in 2016 Canada was admitting nearly six times more skilled workers per capita than their neighbour.

Despite Canada’s promising tech rise, America remains the heavyweight. Silicon Valley, for example, is home to 23,000 start-up companies. Canada is very much the new kid on the block.

This is reflected by the numbers of workers born and educated in Canada that end up in American tech. Some 350,000 Canadians reportedly live in Silicon Valley, while around one in four STEM graduates – including two-thirds of software engineering grads – move south of the border.

Working in the US, they expect to receive 20-30 per cent more pay, and can find jobs with some of the most famous companies in the world. Giants like Facebook and Apple promise a huge variety of exciting roles and responsibilities, far more so than smaller Canadian firms.

America’s famous tech companies are also quite a bit sexier, from social media and dating apps through to holiday property rentals. Canada meanwhile, is developing a reputation for fintech, digital solutions for the energy sector, and artificial intelligence. While these are clearly vital areas of work, they hardly make the headlines abroad and are unlikely to top the list of career choices for young tech grads.

The exodus of Canadian tech workers southwards makes immigration all the more important. And for native-born workers still in Canada, it’s not like there’s a shortage of jobs. In 2016, one estimate projected that the country would be 220,000 skilled tech workers short by 2020. There is no way that the Canadian population as it stands could make up those numbers.

The coming years could be extremely significant, whether or not Toronto strikes lucky with Amazon’s HQ2.

Canada has been creating the right infrastructure in its biggest cities to promote start-ups. Several “tech hubs” have been popping up and thriving, for example, such as the MaRS Discovery District in Toronto which has become the world’s largest innovation lab.

As we’ve seen in Silicon Valley, once tech companies are successful they tend to breed other start-ups. Big successful investors put their money into more start-ups, and the process continues. Canadian companies are often bought by US giants before they get to this stage, but the exceptions to the rule are increasing – Ottawa’s Shopify, an e-commerce platform, is now valued at $5 billion.

If the Canadian tech scene continues to thrive, fuelled by new workers from abroad, it could be genuinely transformative for the economy. No wonder, then, that Canada’s government is so open to immigration. Perhaps some other countries should take note.

Jack Graham is a political commentator and Lead Writer for Apolitical.