Why Microsoft Loves Richmond, B.C.

Why Microsoft Loves Richmond, BC

Here, the company can import foreign tech workers, and maybe prod US lawmakers.

By Cynthia Yoo
Published: November 7, 2007

If you want to understand why Microsoft is about to open a 700-employee software development centre in Richmond, B.C., and how those operations mesh with other multinational corporations and a global high-tech work force, it helps to talk to Steve Ha.

Ha helps run TecAce, based in Redmond, Washington. His firm develops software for Samsung mobile devices and requires Korean-speaking employees experienced in Samsung technology.

But under the current visa system, “it's impossible to bring Koreans into the U.S. now, so we decided to set-up an office in Richmond,” explains Ha.

“It's difficult for Koreans to obtain a green-card even after five or six years of work in the U.S. and we heard that it's much easier to get them into Canada for work,” Ha says.

“I've heard of other firms here gearing up to open offices in Richmond or Vancouver because of the U.S. visa problems.”

Those other firms are following the lead of the biggest software developer of all.

When, last summer, Microsoft announced the planned move, company president Phil Sorgen vowed, “This centre will help Microsoft remain globally competitive while providing strong economic benefits to British Columbia and Canada.”

Likewise, Vancouver Mayor Sam Sullivan was optimistic that having Microsoft in Richmond would promote jobs and technological innovation in B.C.

Across the border, however, some point out that Microsoft and other companies are using the Richmond centre to hire foreign workers they can't otherwise for their U.S. operations.

Others believe it's a tactic to pressure the U.S. government to remove its cap on foreign worker visas. In fact, Microsoft has admitted that it decided to open the Richmond centre in part because it couldn't hire enough foreign workers for their U.S. facilities.

The US H-1B visa

Microsoft and other tech industries in the U.S. hire foreign workers through the H-1B visa. Originally, these visas were established to attract skilled professionals to come to the U.S., work for five to six years and apply for citizenship.

However, in 2006, about three quarters of these visas were taken by Indian outsourcing firms such as Infosys.

These firms send Indian workers to U.S. firms for two to four year terms in order to study their operations and then outsource the work back to India-based companies.

This discovery led to a U.S. Senate investigation into allegations that Microsoft and other companies were using these visas to outsource U.S. jobs overseas, contrary to its mandate to attract skilled immigrants. In response, Microsoft and others countered that current immigration policies were antiquated and did not meet the needs of globalized economies.

“Microsoft, like many big U.S. high tech employers, was keen to push the recently failed U.S. immigration reform bill which upped the quotas for skilled migrants,” explained Mark Ellis, professor of geography at the University of Washington.

Ellis thinks the timing of Microsoft's July announcement, so close at the heel of the failed U.S. immigration bill in June, might have been intended to signal that Microsoft would offshore its operations to Canada if it doesn't get its way on immigration reform.

Microsoft spokesperson Lou Gellos told The Tyee, “Discussion about [a centre] in Western Canada has been going on for 10 years or more. In the last year or so, the debate has intensified.” The failed immigration bill, he said, was “certainly one of the motivations, but not the main motivation” for his company's moving ahead on its Richmond plans.

Canada's welcome mat

Canada is welcoming U.S. companies looking for more accommodating immigration policies. After all Canada has a labour shortage of highly skilled workers. Earlier this spring, B.C. reported a record low unemployment rate of four per cent and predicted a shortfall of 350,000 workers in key fields.

Currently, Canada has no caps on all classes of foreign worker visas and last November, the Canadian government launched the Advantage Canada Plan, under which the combined ministries of Citizenship and Immigration, Human Resources, and Service Canada recently began measures to improve its Temporary Foreign Worker Program.

“The Temporary Foreign Worker Program requires businesses to look for Canadian hires first and file a labour market opinion that there is a need for foreign workers,” explains Lori Reimer of Citizenship and Immigration Canada. “Essentially it is a supply and demand issue.”

That market analysis process was relaxed for Microsoft. Reportedly, Microsoft enjoyed an expedited process of only two weeks to obtain their visas, but other firms have not enjoyed that privilege.

Steve Ha's TecAce has set-up what he call's a “virtual office” in Richmond, until the six month long process to hire foreign workers from Korea is completed. “Our branch is only a virtual-office for now because the process [in Canada] is much more complicated and time-consuming than we expected.”

It's a flat world after all

Fast fading is the assumption that North American high-tech workers are protected from outsourcing if they are involved in complex projects. The common belief was that it was too difficult to coordinate high-quality work over differing time-zones and cultural and language barriers.

“Absolutely not. It doesn't matter anymore if you manufacture fruit-of-the-loom underwear or complex code,” states Marcus Courtney of the Washington Alliance of Technology Workers.

“Companies want to find out…who can do the work cheapest and they move their facilities, products and services around the globe to do that. Boeing's Dreamliner project in the Northwest is a perfect example of this. It's simply a myth that white-collar jobs are simply too complex, too difficult for their companies to outsource,” says Courtney.

When asked if temporary foreign worker visa programs are used to outsource jobs, Anthony D'Costa, professor of Comparative International Development at the University of Washington says, “Short-term visa programs are functional. They are trying to meet labour shortages without committing to having more foreigners permanently.”

“How many will come in the short term is difficult to say but I am certain [it's] not large enough to displace local workers wholesale. Besides, employers want good quality professionals and the world does not have an infinite supply of them,” says D'Costa.

He asks: “Which would you prefer? Foreign workers coming to Canada and working and spending their earnings in Canada or Canadian firms doing the work abroad using foreign workers and earning profits for the Canadian shareholders?”

Fair enough. But real questions remain as to whether Canada can leverage future Richmond centres into promoting local innovation or whether such centres will end up as mere way stations in the global outsourcing system.


Related Tyee stories:

* Why Google Is Bill Gates' Nightmare
The search engine company is about to get the capital to reinvent personal computing and leave Microsoft in the dust.

* How We Are Outsourcing BC
Charles Campbell's four-part series looks at industry and government.

* Denial as Projections Place BC Cities Under Water
Dyke plans, property values don't reflect sea rise predictions.

Cynthia Yoo is a Vancouver journalist with a focus on high-tech industry, immigration and new media.