the tech brain drain and talent shortage in canada

Over the past decade, Canada has steadily built a reputation as an incubator for young talent in the IT sector. The Toronto/Kitchener/Waterloo corridor, in particular, is an excellent place for up-and-coming IT professionals to obtain high-quality education and training. The problem is Canada’s having trouble holding onto talented IT professionals.

tech brain drain and talent shortage

what is brain drain and why is it happening?

Brain drain is the practice of workers obtaining their education in Canada, then leaving for employment elsewhere (typically the US). Each year Canada loses approximately .7% of its population to the US. Many of those people are skilled workers seeking higher paying opportunities. In the IT sector, students obtain their education in Canada, where the quality of education is high, but costs are low and often subsidized by the government. After completing their education in Canada, they leave to accept lucrative positions with American tech companies. The Bay Area (Silicon Valley) is a popular destination, however high-paying roles can be found all over the US.

why don’t IT workers stick around in canada?

There are two main reasons: money and brand recognition. Most of the big names in tech (that new grads want to work for) are headquartered in the US. Canadian tech workers also earn significantly less than their American counterparts. The average IT worker in Canada makes $100k CDN (or $74k USD). While that’s a higher salary than the average Canadian, it’s a fraction of what they stand to earn from their skills in America. Salaries in the Bay Area (145k USD), New York (133k USD) or Seattle (138k USD) are almost double. Even workers in lesser-known American tech-hubs such as Denver (117k USD), Chicago (114k USD) or Washington (123k USD) significantly out-earn Canadians. There’s a big financial incentive for workers to relocate.

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are there solutions to counteract brain drain?

increasing skilled immigration

Allowing immigrants with tech skills to enter Canada can help counterbalance the number of tech workers leaving for the US. Canada has done a good job of establishing an excellent reputation on the international stage. Immigrating to Canada has become more desirable as paths to immigrate to the US have been locked down under the Trump administration. The federal government has loosened restrictions on skilled immigrants, creating the Express Entry program to make it easier for people with in-demand skills to become permanent residents.

Replacing tech workers with skilled immigrants isn’t without its challenges. Canadian employers continue to prioritize local experience. If increasing the number of skilled immigrants entering Canada is part of the long-term solution to counteract brain drain, employers will need to redefine their hiring requirements. Here are some things to consider:

  • Break down your biases. The desire for local experience often comes down to comfort and familiarity. Instead of looking for ‘cultural fit’ (which is often a code word for ‘people like us’) seek out new hires who have a growth mindset.
  • Having diverse perspectives on your team isn’t just nice-to-have, it’s critical for growth. Diverse teams report higher revenue, innovation, worker satisfaction and retention among other positives.
  • 40% of tech workers will hail from outside of Canada over the next decade. Are you willing to ignore almost half of the worker supply?
  • Revamp your hiring processes and think outside the box. For instance, technology has made it easier to vet candidates from anywhere in the world. Virtual interviews can be used to connect with people who are approved for the Express Entry program, before they even land in Canada. Nimmy Martin, a technical recruitment manager at Randstad says, “Using digital technology to interview high skill talent that is pre-approved for permanent residency allows me to stay ahead of the competition. A lot of the time, the supply of cloud or data scientists is extremely low while demand is high, so these people are finding work before they even set foot in Canada.”

grow talent in addition to sourcing it

While immigration ensures employers have access tech talent, it doesn’t address the issues that lead to homegrown workers to leave the country in the first place. A key problem is young workers are being offered better opportunities outside of Canada early in their careers. We need to create pathways for inexperienced tech workers to develop into intermediate and senior roles.

Many tech programs require students to complete co-op placements to graduate. Co-op placements are often easier to find in the US, meaning a new IT grad’s first foothold in the job market isn’t in the country that invested in their training and development. According to one study published in The Globe and Mail, 66% of Canadian software engineering grads go on to work in the US. And of all the international students who gain their education in Canada, 66.7% go on to work outside of the county as well. Canadian companies need to offer attractive entry-level opportunities to young tech workers. Once they’ve accepted a position in the US, it’s very difficult to entice workers to come back to Canada. Yet, Canadian companies often balk at hiring inexperienced talent.

Searching for a perfect fully-formed senior employee is often unrealistic and costly. There are lots of new grads who could grow into what you need. It may require some upfront investment and patience early on, but it’s a guaranteed way to build your talent pipeline. Training your team in-house also allows you to build a cohesive team dynamic and instill a common way of working. Developing your own talent also leads to more loyal employees. When you take a chance on someone, invest in their potential, and treat them well, they’ll do the same for you.

build employer brands

Awareness of Canadian startups and tech brands is much lower than their American counterparts. Young tech professionals want to work for the Googles, Ubers and Airbnbs of the world - established companies with instant name recognition. America is well-known for its thriving tech culture and most IT workers can name dozens of popular American brands they’d be proud to work for. Canada’s top brands are lesser-known and therefore less desirable to work for. Some Canadian organizations like Shopify, Wealthsimple, Hootsuite are making strides establishing themselves as ‘cool’ Canadian alternatives to big-name American brands. These companies are actively building their employer brands to appeal to Gen Z and Millennials workers, a key demographic for tech companies. They’re making an effort to share their brand values and office culture, and building their cachet online and on social media, establishing themselves as a desirable place to work. Established Canadian brands also need to do the same.

highlight the good parts of canadian tech

Canada’s tech sector, as a whole, has a reputation that sells it short. One frequently repeated narrative is that Canada is a place to find skilled tech talent at a lower cost. While that’s great for enticing companies to launch Canadian offices, it drives away talent. In-demand candidates don’t want to settle for working in a place that brands itself as the ‘budget’ alternative to America. This reputation has led many new grads to develop a ‘Cali or bust’ mentality. Working at home in Canada is seen as failure or a backup plan. Canada’s tech sector needs to focus on building a value proposition that’s appealing to both tech workers and employers. The right approach will lead to other economic benefits such as increased interest from venture capitalists and fewer homegrown Canadian startups relocating to the US (and taking intellectual property, tax revenue & profits with them) as soon as they start to take off.

Canada can’t compete on salary, but our tech sector has a lot of things going for it. In a time when many consider the US to be a polarizing place to live, Canada remains a welcoming, inclusive place to build a life and career. We have great healthcare, a stable government, a high degree of freedom, and an overall excellent quality of life. We also need to promote and publicize our wins on a large scale. For instance, Shopify, one of the crown jewels of Canada’s tech industry, is worth over $22 billion. Yet many people don’t realize that Shopify is a homegrown Canadian company. Lots of innovative, up-and-coming Canadian startups like Element AI, wealthsimple, Ritual, StackAdapt, Coinsquare and Clearbanc are gaining steam. Using their momentum to increase Canada’s visibility as an innovative tech hub will be key to capturing the attention of young tech workers who want to work for cool, forward-thinking companies they believe in.

 

Canada’s brain drain problem doesn’t have any quick or easy fixes. Though immigration has been used as a band-aid to patch the gaps and help employers fill critical IT roles, it’s not addressing the root issues that lead young tech workers to leave in the first place. Long-term solutions will require a multi-pronged approach to embrace immigrant talent, create attractive entry-level job opportunities, and change the narrative about what Canada’s tech sector has to offer.

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