Technology

Vancouver, the New Tech Hub


Vancouver, the New Tech Hub

Illustration by Tracy Ma

(Corrects description of the company Sauce Labs in 7th paragraph)

In the heart of downtown Vancouver, construction workers are installing glass facades on two office towers. One will be an engineering hub for Microsoft (MSFT), the other for Amazon.com (AMZN). Facebook (FB), Salesforce.com (CRM), and a bunch of startups with less familiar names have also been setting up shop in the city. In addition to great views in a convenient time zone, Vancouver offers U.S. tech companies world-class talent, lower salaries, and few immigration headaches.

Each year the U.S. government grants as many as 85,000 H-1B visas for highly skilled workers. In the last two years, it received so many applications that it stopped taking them after five days and held a lottery. Companies applied for about 172,500 visas in April, meaning at least 87,500 engineers, developers, and others couldn’t take jobs in the U.S. Canada welcomes any highly skilled worker who has a job offer, and salaries for tech workers are about 10 percent to 15 percent lower than in the U.S., according to Jen Geddes, a steering committee member of HR Tech Group, a networking group in British Columbia.

Karen Jones, Microsoft’s deputy general counsel, says her company applied for about twice the roughly 750 H-1B visas it received for 2015. “The U.S. laws clearly did not meet our needs,” she says. “We have to look to other places.” Microsoft opened a small office in Vancouver in 2007, when U.S. visa applications for the first time quickly surpassed the congressional limit. This month it announced plans to more than double its roughly 300-employee office in Vancouver, where video games have been the focus. There, Microsoft will hire and train 400 software developers from around the world to work on mobile and cloud projects. Jones says Microsoft didn’t choose to expand in Vancouver “purely for immigration purposes, but immigration is a factor.”

Last year, as salaries and hiring rebounded from their post-recession lull, other companies began looking for talent north of the border. Amazon, which has a small Vancouver outpost, signed a lease for up to 156,000 square feet of space in the downtown tower, enough for 1,000 employees. The company has more than 100 Vancouver-based job openings posted on its website—owing, it says, to the city’s talent pool and proximity to Seattle.

Salesforce moved its Vancouver operation into 17,500 square feet in Gastown, the city’s equivalent of San Francisco’s startup-heavy Mission District. Last year, Twitter (TWTR) interviewed candidates for what it called in job postings a “global centre of excellence.” Facebook opened a temporary Vancouver office last May to train as many as 150 newly hired developers while they wait for U.S. visas. The company has continued to hire recent graduates to work there. Facebook’s Vancouver recruits come from Belgrade, New Delhi, São Paulo, and Shanghai (as well as Canada), according to LinkedIn (LNKD) profiles. The mix of hires varies from company to company.

Even with Canada’s more lax visa rules, American companies are still scrambling to hire the tech talent they need. “I’ve talked to the Amazon recruiter, who told me, ‘I give people an offer on the phone, and then there’s silence, and then they take it,’ ” says Boris Mann, founder and managing partner of Full Stack, an angel investment firm in Vancouver. “That doesn’t happen anywhere else.” Amazon says it competes for talent everywhere, including Vancouver.

Sauce Labs, a San Francisco startup that makes tools developers use to test whether their web and mobile apps function properly, employs three of its 20 engineers in Vancouver and is looking for a fourth. Adam Christian, the company’s vice president for engineering, has had a tough time competing with bigger companies for engineers in San Francisco. In Vancouver, he says, “We found a pretty awesome cluster of talent who are open to reasonable wages. It’s English-speaking, and it’s a nice short flight [two hours from San Francisco].” Christian says his Canadian staffers aren’t interested in moving to Silicon Valley. “They are very truly Canadian,” he laughs. On a recent afternoon in the city, two Sauce Labs developers were working in a conference room, occasionally glancing up at a hockey game projected on the wall.

Mann says he hopes the influx of engineers seeds Vancouver with more tech talent eager to build companies, not just work at outposts of foreign ones. “Some of those people will be wired such that they get bored of working for a big company and leave,” he says.

Mann and other Vancouver tech professionals question whether the U.S. companies are fully embracing the tightknit community of local developers: When Facebook hosted some lectures and hackathons last year, it required visitors to sign a general nondisclosure agreement barring discussion of the event. (Facebook says the agreements are standard at all its offices.) “It’s just a little off-putting,” says Cliff Hammerschmidt, an Amazon engineer who runs a networking group for about 3,000 software developers. Tech companies regularly sponsor his group’s meetings, and its members come from most of the popular employers, but there’s been “total silence” from Twitter’s Vancouver office, he says. “I have seen nothing of them.” Kalvir Sandhu, chief executive officer of Brewhouse, which develops software for startups, says, “This is the worry: If big companies aren’t making a splash, are they just doing it for the visas?” Twitter declined to comment.

Although U.S. companies pay lower wages in Vancouver than they do in the U.S., they still offer more than many local companies can afford to pay. “We are more focused on the culture of being at a startup,” says Igor Faletski, co-founder and CEO of Mobify, an 80-person company based in Vancouver that helps remodel e-commerce sites for smartphones. Mobify hosts daily fitness and yoga classes, and it recently faced off in a game of Quidditch against staffers from Canada’s HootSuite, a social media platform that’s raised almost $190 million in funding and has committed to staying in Vancouver.

Amazon’s and Microsoft’s expanded Vancouver offices aren’t slated to open for at least a year, and there remains the long shot that Congress will raise caps on foreign workers. U.S. policymakers widely agree that this summer offers the best opportunity to pass immigration reform for years to come. “The closer we get to the midterm elections, the harder it is to get things done around here,” President Obama said on May 13. After the elections, the presidential campaign will kick in, making it all the less likely that Congress will act.

The bottom line: Microsoft, Amazon, Facebook, and others are adding workers in Vancouver in a move that sidesteps U.S. visa caps.

Weise_190
Weise is a reporter for Bloomberg Businessweek in New York. Follow her on Twitter @kyweise.

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