Regardless of the outcome of this year’s U.S. presidential election, it’s clear that the U.S.-based information technology (IT) companies should look elsewhere to host their foreign talent.
This is not only due to the unpredictability of the U.S. immigration policies but also because of what the COVID-19 pandemic has taught us: that we can work from anywhere (WFA).
In the post-COVID-19 (as well as post-Trump) world, Canadian immigration solutions could facilitate more rapid and long-term adoption of the WFA model by the U.S.-based IT companies. Three solutions for these IT companies who are struggling with U.S. immigration when hiring or retaining foreign talent through the H-1B and L1 visas are worth considering.
Working from anywhere and immigration
In the recent Harvard Business Review article, “Our Work-from-Anywhere-Future,” the author argues that: “COVID-19 […] proved that it is not only possible but perhaps preferable for knowledge workers to do their jobs from anywhere.”
He gives numerous examples of how organizations have successfully adopted the WFA business model in the U.S. and beyond.
The immigration restrictions in the U.S. that affected the H-1B visa holders and the uncertainty of what the Biden administration would bring raised a question among the U.S.-based IT companies: “Do we have to keep our foreign talent physically in the U.S. in order to serve our U.S.-based clients?”
The WFA model provides a simple answer: “No. You can keep them anywhere!”
But where should we keep them, if not in the U.S.?
According to a Tufts University research project cited in another HBR article, the readiness of countries to enable WFA varies significantly based on the resilience of Internet infrastructure and robustness of digital platforms. These criteria serve as a guide as to where U.S.-based IT companies could place their WFA foreign workers.
The diagram in that article illustrates the WFA preparedness of several countries, including Canada. For the U.S.-based IT-companies, it is evident that Canada is the most suitable place for transferring their IT teams, nearshoring the foreign talent or entirely relocating to Canada.
Let’s take a real-life scenario: A five-year-old successful IT company in California has 10 foreign employees from different countries that hold H-1B visas expiring in March 2021. Due to the recent visa restrictions, it is highly unlikely (or under a significant risk) that the company will succeed in renewing their visas when due and does not want to send them to their home countries. They need to be in the same time zone to serve the clients in the U.S. These H-1B holders are key employees with special knowledge who have been with the company for three years.
What solutions does Canada offer to such U.S.-based IT companies and H-1B workers?
Team transfers to Canada through Intra-Company Transfer
They can be transferred to Canada through the Intra-Company Transfer work permit program. Not all U.S.-based IT companies can move their teams to Canada. They must fulfil certain requirements:
- A company must be presently active and selling goods or providing services.
- A company must be at least one year old. The older the company, the better it is.
- A company in the U.S. must be incorporated and have employees.
- There is no minimum required under Canadian law to operate a business in Canada, but a company must have sufficient funds to sustain and grow the business in Canada. Based on previous experience, at least US$100,000 should be ready for Canadian expansion.
Not every employee from a U.S.-based IT company can be transferred to Canada. Only the owners of the company, executives, supervisors and specialized knowledge people can be transferred to work in Canada. The specialized knowledge person must be working at the U.S. company for at least one year before they are transferred to Canada.
When transferred, these H-1B holders can initially get a one-year restricted Canadian work permit allowing them to work for the newly established Canadian affiliate. Their work permits can be extended as long as the new Canadian affiliate has a physical location in Canada, hires at least one Canadian and the U.S.-based company is active. In this scenario, a smaller corporate team made up of U.S. citizens or green card holders can remain in the U.S., while the so-called technical team can be transferred to Canada and continue serving the U.S.-based clients.
This solution may not fit those IT-companies that do not want to have a permanent establishment in Canada or cannot afford (financially or otherwise) transferring all their H-1B holders to Canada. If that is the case, then they could consider nearshoring them in Canada, a solution we discuss in the next article.
This is the first of a two-part series.
This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc.
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 U.S. and the Latin American markets.
If you are a US-based IT company struggling with the H-1B visa issues or an IT company from elsewhere planning to move to Canada, contact us by email at WeCare@sobirovs.com to see how Sobirovs Law Firm can help you.
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