Soon after its founding in New York in 1997, remote people management solution TransparentBusiness looked to India as a more affordable outsourcing partner. Over time, however, labour costs in that country increased, and eventually the cultural, linguistic and time zone challenges outweighed the savings.
After relocating to Europe during the 2008 financial crisis, chief executive officer Alex Konanykhin sought to bring the company back to North America, but couldn’t justify the cost of returning to New York.
“It was 2013 that we returned to North America, making Toronto our home, because we were thinking if we have a tech company we will need to scale up, and doing it in New York would be almost twice as expensive compared to doing it in Toronto,” he says. “Out of all options in global hiring, Canada stands out because it’s the same language, same culture and it’s a short flying distance.”
With more companies moving their operations from a physical workplace to work from home, location – at least within the same or nearby time zone – is becoming irrelevant. With the same language, culture and time zones as its southern neighbour, but with much lower labour costs, a favourable exchange rate and more relaxed immigration laws, Canada is poised to become an even more popular alternative for American employers in the coming years.
According to a recent survey of 317 chief financial officers by Gartner, 74 per cent intend to move at least 5 per cent of their previously onsite work force to remote work on a permanent basis, even after the crisis is over.
“Now that it’s no longer required to hire locally, Canada immediately sticks out as a very attractive option,” Mr. Konanykhin says. He adds that most companies likely won’t pursue a full-scale transition from the United States to Canada, but when they need to add or replace a staff member for a remote position there’s no need to limit their options based on driving distance. “If it’s a remote position they can hire on the other side of the border and save on labour costs,” he says.
Aside from lower labour costs, Canada offers companies like TransparentBusiness a few other advantages, such as favourable tax incentives and grants, lower turnover rates among knowledge workers, and perhaps most importantly, high-speed internet access.
“Everything comes down to high-speed internet,“ explains Kirk Laughlin, the founder and managing director of Connecticut-based Nearshore Americas, a trade publication that reports on offshoring opportunities with the United States’ closest neighbours.
“In developing economies, it’s a bit of a patchwork, some are stronger than others, some of the countries only have 50 or 60 per cent of the population with access to high-speed internet; I believe in Canada it’s closer to 90 per cent,” he says.
Mr. Laughlin explains that in recent years Canadian cities have also developed reputations for certain expertise. Toronto, for example, is perceived as having strength in financial services, Montreal is emerging as a hub for artificial intelligence; Vancouver is a popular talent source for Silicon Valley-based tech companies and Nova Scotia is quickly developing an outsourcing sector.
“It’s the same whether someone is working in Menlo Park from San Francisco or Vancouver,” explains Sunil Sharma, the managing director of the Techstars Toronto Accelerator. “A University of Waterloo or Toronto engineer might be $110,000 or $120,000 salary, whereas in the U.S., a Stanford, UC Berkley, Columbia or M.I.T. grad might be US$200,000, which is like $300,000 Canadian, so you’re close to a three-to-one difference.”
Mr. Sharma says there are early indications that tech industry employers in the United States are taking a closer look at Canada now that their American staff are working remotely.
“I'm already seeing it,” he says. “I know of a major U.S. tech company that is signalling heavily that they're moving into Canada for engineering hiring purposes.”
It’s not just U.S. companies, either. According to Mr. Sharma, international entrepreneurs who want to move to the United States but are struggling with immigration and visa restrictions are increasingly looking to set up shop in Canada instead. He points to three current Techstars members – originally from Poland, Nigeria and Turkey – who are moving to Canada as a result of the United States’ tightening borders.
After a year and a half in Toronto, Mr. Konanykhin of TransparentBusiness says travel across the Canada-U.S. border proved to be too difficult without citizenship in either country, prompting him to return the company to New York in 2015.
“Doing it [in] Manhattan is not my choice,” he says. “I do intend on acting on our plans and resuming our operations in Toronto, because now most of us have green cards, and we can freely move back and forth across the border once travel restrictions are lifted.”
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