For a long time, Vancouver has been dubbed the Silicon Valley of the North because of its vibrant startup scene. But it has yet to fulfill its potential and this is partly due to the brain drain phenomenon where the brightest talent heads south to the sunny climes of California.
Although tech companies in Vancouver have come out on top in the recent ranking of Canadian businesses, high salaries just don’t seem to be enough to turn the city into a global industry leader. The city is home to top-ranked startups like Shoes.com and companies like Canada Driver and Buyatab, but growth within the sector is far from unique. Rather, it probably has more to do with tech becoming increasingly important than a unique environment where technology companies thrive.
Nevertheless, Vancouver continues to attract tech giants like Amazon and Microsoft who have a presence in the city. But it’s impossible to compare it to San Francisco which has the best tech ecosystem on the planet (and that’s not going to change anytime soon).
The Trump administration's overhaul of the H1-B work visa program in the U.S. is also forcing companies to look at Canada as an alternative for their foreign-born workers. Tech companies in America have long relied on a foreign workforce and it looks highly likely that they continue to look elsewhere to fill the talent gap within the country.
If foreign workers end up at the Vancouver offices, this will also end up placing more strain on the local housing market. Even if there is an influx of foreign-born workers, they will all be working for American tech giants with an office in the city.
As a result, the challenge of recruiting senior engineers to grow a business will continue. Further, even if you can attract some great talent to your startup, they have to be able to afford housing in the area.
British Columbia’s technology minister, Amrik Virk, is trying to address this issue. But his approach is more long term with a special focus on introducing mandatory skills like coding in schools (from elementary to high school).
Further, he also hopes to set up programs to provide financial support for paid internships at the post-secondary level at tech companies. There’s also a broader initiative with a $100 million fund for B.C. based startups, but again it’s not an immediate solution to bring senior talent to the city.
These are great moves by the local government even though it will take some time to reap the benefits of these programs. But the tech industry in B.C. now employs more than forestry, mining, oil, and gas combined, so the deficiencies within the industry will be hard to ignore.
The Temporary Solutions
Although growing skills and talent at home is the perfect long term solution, it will be a decade or two before it can fill the skills gap. So in the meantime, there’s the option of going with an outsourcing solution or even hiring workers from overseas to get access to the skills you need right now.
Hiring from overseas and getting them in-house is a great option, but competition for these individuals may also rise if Silicon Valley-based tech companies start bringing in overseas talent to B.C. Startups in the area won’t be able to compete with what these businesses can offer their recruits.
The other option is to outsource tech functions overseas. It’s quickly becoming the norm as companies try to keep up with the pace of technological evolution and it can also work out to be highly cost-effective.
Further, what was once seen as a cost-effective option that can get even cheaper as outsourcing providers brace themselves for what happens next in the U.S. As America may stop this practice to stay true to the president’s policy of “buy American, hire American,” it might take them right out of the marketplace making the outsourcing industry even more competitive.
What happens over the next few months (and years) will be interesting for Vancouver-based startups as events south of the border will have a significant impact on the industry. But to make things happen, startups will have to act now to access the talent they need and make their businesses successful.