Microsoft takes a big step to near-shoring in Canada

Opening of Software Development Centre could lead the charge for industry

When Microsoft made what appeared to be a minor announcement last week that it would expand its Canadian operations with the creation of the Microsoft Canada Development Centre for software development based in the greater Vancouver, British Columbia area, it went mostly unnoticed.

One of the only exceptions was a story on InfoWorld, Microsoft Canada Responds to Immigration Woes, which recognized something new was afoot.

What no one in the lower 48 states realized at the time was how significant this move north might be and how the Canadian immigration policy makes it all possible.

Nevertheless, Canadian Katarina Onuschak, a licensed immigration consultant and owner of T&CS Canada, a consultancy for Canadian immigration, says she immediately recognized the significance of the Centre when she read the news.  

"It will be a beginning of new era," said Onuschak.

There are two pieces to the puzzle that, when brought together, may indeed represent a new era for Canada's high tech industry and for U.S. companies who prefer near-shoring as opposed to offshoring.

Canada's far more liberal immigration policy for temporary high tech workers combined with Microsoft's stated intentions of opening the software development center to house developers "from around the world" makes it clear why Onuschak responded as she did. 

This makes it possible for Microsoft and others to have their cake and eat it too.

Near-shoring gives companies better time zone management and allows companies to hire programmers based on whatever parameters they choose, which may be skills or pay scale, while not having to face the limitations of green card and H-1B regulations.

Of course it will also kick start a mostly slow-growing software development industry in Canada.

As the Microsoft announcement plainly stated, "The Vancouver area is a global gateway with a diverse population, is close to Microsoft's corporate offices in Redmond, and allows the company to recruit and retain highly skilled people affected by immigration issues in the U.S."

Many companies may follow Microsoft's lead say the experts. 

The liberal Canadian policy comes from a project targeted specifically at information technology workers, who are considered a special category by Canada's immigration agency.

The special category created by the Canadian government for information technology workers and the six categories under which workers must qualify was actually created back in 1997 as a pilot project to make sure Canada had enough programmers to deal with Y2K.

As interpreted by the National Labor Market [Canada's equivalent to the U.S. Department of Labor], any software developers falling into the six major developer categories do not have to go to Service Canada, Canada's Immigration and Naturalization agency, to apply for a work permit. Workers can go straight to a Canadian visa office to apply. This speeds up the visa process.

The ruling states that "under this process, no confirmation letter from Human Resources and Skills Development Canada (HRSDC) is necessary for specific jobs for which finding a foreign worker will not have a negative impact on Canadian or permanent-resident job seekers and workers."

The six categories of software developers include the following:

Senior Animation Effects Editor, Embedded Systems Software Designer, MIS Software Designer, Multimedia Software Developer, Software Developer -- Services, Software Products Developer, and Telecommunications Software Designer.

The policy from Citizenship and Immigration Canada goes on to state, "This means that if you are coming to Canada to work in one of the jobs listed ... you do not need a letter from HRSDC, and your work permit application may be processed more quickly."

There is little doubt that the Microsoft Development Centre will be home to software developers from around the world," as Microsoft says in its press release.

Even critics who believe current U.S. immigration policy for high tech workers is too liberal agree on what this Centre will represent.

"Make no mistake about it. That programming group Microsoft will set up in Vancouver won't be staffed with many Canadians ... you'll find that the programmers in that group will be mainly people on work visas, not Canadian citizens or permanent residents," said Norm Matloff, a professor of computer science at University of California at Davis.

In the meantime, immigration lawyers on both sides of the border say that the leveraging of liberal Canadian immigration law by Microsoft has the potential to jump start a major move north for software development. 

Greg Siskind, a partner at Siskind Susser Bland and an immigration attorney here in the States says that he's been warning lots of people who agree with CNN's Lou Dobbs when he rails against outsourcing at the same time that he complains about the H-1B visa program that they can't have it both ways.

"I would say I am surprised it is taking this long. Companies have few choices. They can either make do without or move operations or steal workers from other companies," said Siskind

Sergio Karas, an immigration attorney based in Canada, also believes Microsoft's move to Canada is in reaction to U.S. immigration policy.  

"This move by Microsoft is H-1B driven. There is no cap in Canada. Depending on the country of origin, we usually prepare an application, and in three weeks, a person can be working here," said Karas.

However, Karas believes the pilot program needs updating to better reflect current needs for software development -- Karas wants to see revisions in the six original software development categories -- as well as revisions in pay scales.

"The pay scales required have not been revised for some time."

Even at lower pay rates, however, Microsoft and others may very well be able to attract skilled workers to software development centers like Microsoft's. The fact is the U.S. and Canada are still both highly prized working environments whose standard of living and pay scales, even when low by national standards, are typically higher than what a worker can earn in his home country. 

Karas says it is still too early to tell if the Microsoft move will create a wave of similar centers. Siskind says he is surprised it took so long to happen. And Onuschak says, "If that's Bill Gates intention, it would be great if it happens."

Copyright © 2007 IDG Communications, Inc.

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