Does Canada Have a Labor Talent Problem in Tech?

Remote work means a Rural cheap workforce for American companies

Canada is a majestic land for educating software engineers and people in tech, but why does it not retain its own talent? Canada, in particular Montreal and Toronto are huge education hubs that haven’t translated well into business and startups until perhaps the reign of Donald Trump, when talent has started to pool in Toronto (more on that later).

The brain drain however from Montreal, Vancouver and the Waterloo crescent for Silicon Valley has been fierce.

Canada Doesn’t Pay its Engineers or Tech Workers Real Earnings

While Canada has pretty high taxes, salaries for talent don’t match the U.S., and so each generation like clockwork, the exodus continues.

Talent was already hard to come by before 2020. Now its scarcity is driving salaries up by as much as 30 per cent a year for some companies as they battle for Canada’s best engineers, scientists, developers and designers, executives say.

I stumbled on a post by of all people an Engineer at Substack, and it really made me think. Kamil states:

There will always be exceptions but it seems inescapable that Canadian engineers, data scientists, designers, and other tech workers sell themselves short when remote opportunities with US companies exist. It used to be the case that you needed an "in", some connection to Silicon Valley, to access these opportunities. That's no longer true.

Remote Work Facilitates the Brain Drain

• What he’s alluding to I think is the remote WFH era is going to make it even easier for U.S. based companies to get access to Canadian talent and be able to pay them more than Canadian companies will thereby just using Canada as an education center.

If I can work remotely, I don’t need to live in some crowded U.S. city where the cost of living doesn’t make sense any longer. I can actually choose to be a remote worker in rural Canada, and still get paid as if I was living in a city. Or I can move to a city like Toronto and find even greener fields where there are some serious opportunities now.

• Toronto is becoming a major Tech-hub

• The remote rural worker in “Zoom towns” (think Halifax) is becoming a thing.

From ‘boomer’ companies to encroaching giants, Canada’s tech sector has a labour problem

Canadian companies won’t be able to compete financially with the kind of salaries these tech workers educated in Canada deserve, leading to a new remote economy where the highest bidders win the talent.

While Americans move to sunbelt regions such as Florida, Arizona and Texas, Canadian graduates can move to a beautiful Canadian town and work remotely for half-decent pay from an American employer. Meta moving a base into Toronto, isn’t’ exactly an isolated incident.

According to a LinkedIn Editor, Meta Platforms — the parent company of Facebook, Instagram and WhatsApp — has announced to build a new engineering hub in Toronto.

The move is expected to create 2,500 new openings over the next five years, including remote positions across the country, and will mark Canada's first WhatsApp, Messenger and Remote Presence engineering teams. Meta also announced $510,000 in grants for 17 Canadian research labs to help develop their new virtual reality technology known as the "metaverse."

So the dream of working in BigTech doesn’t mean you need to move and work in Silicon Valley any longer. Remote work and WFH changes the game for the brightest international students who use Canada as their education center, they then have more choices than ever before.

If you want to understand the biggest problem in Canadian tech right now, ask someone who jumped from a Canadian company to an American one how their life has changed. The stories all sound the same, Kamil’s (the Substack Engineer), isn’t an isolated case.

Canada is Failing Big-Time at Retaining its own Talent

Canada’s policies seem desperate for jobs, even at the expense of retaining Canadian talent for Canadian companies, it sound a bit absurd. Canada doesn’t seem to know how to support its own talent. That same engineer remembers politicians bragging about the low cost of Canadian labour as governments rolled out the red carpet for Amazon.com Inc. a few years ago, hoping it would establish a second headquarters in a city such as Toronto or Calgary in a widely publicized competition across North America.

In Montreal, we even have French first laws that encourage our top talent to leave the Province for greener fields. Only Toronto and Vancouver are truly succeeding with more dynamic startups in the 2020s thus far. While some Canadian towns have managed to attract remote workers, this has more to do with housing affordability and scenic views than any policy or companies that are able to attract and retain top talent.

Canada’s relationship with technology and engineers therefore is rather problematic. No wonder we aren’t able to scale many of our startups into global businesses. Shopify and Lightspeed Commerce are really very rare events in Canadian business history.

As every year a new crop of Engineering talent from Canadian Universities prepare to interview with BigTech, they more or less know the score. “Are you the greatest thing since sliced bread, or are you cheap outsourcing for America?” the engineer asks. It’s a worthwhile question, given the number of U.S. giants that have already set up engineering outposts here, including Amazon.com Inc.

For a long while now BigTech including Microsoft, Google, Facebook, Amazon and others have set up bases in Montreal, Toronto and other parts of Canada to facilitate among other things the recruitment of this cheap talent with a moderately good educations. This functionally means Canada has been unable to form decent companies and the incentives to do so are very poor.

The Globe and Mail article even positions this in a dimmer light. When it says, “The problem gets worse. American corporate hegemony has a lot to do with America’s market size, but that size also generates lots of genuinely world-changing ideas. By contrast, many of the biggest TSX-traded tech companies care more about mergers and acquisitions than innovation, sell boring business-to-business software, or both.”

The Choices of Talent Made in Canada

A top software engineer still might want to move to an exciting life in Miami, Austin, Phoenix, San Diego for what have you, but the option to remain in a scenic town in B.C., Alberta or the Maritimes remains, and Canadian companies are more than ever, unlikely to be able to lure the engineering talent away from American companies.

Many of the kids educated in Canada in technology will actually be international students with no real ties to Canada or their city where they got their degree, so they have been planning to move all along for a better life.

Outside of Toronto’s growing startups scene, there’s not much to be excited about. Platforms are exciting – a chance to work on the cutting edge of how everyday people experience the digital world. But Canadian companies, numerous engineers and developers say, are very rarely so exciting. Furthermore the pay discrepancy can be “life alerting”.

The Battle for Talent is Getting Even more Real

Nearly every Canadian tech executive is sweating this change. Talent was already hard to come by before 2020. Now its scarcity is driving salaries up by as much as 30 per cent a year for some companies, executives say, as they battle for Canada’s best engineers, scientists, developers and designers.

One Toronto-area undergrad who just completed a $10,000-a-month internship in Canada with a Big Tech company puts this feeling more succinctly. His country, he said, is filled with boring “boomer tech companies.”

For myself, I'm mostly pleased that I can demand market rate for my work without having to relocate to the US. - Kamil Tusznio, Substack Engineer.

Remote work and BigTech moving into Canada provides software engineers and tech workers educated in Canada with even more choices and the ability to remain in Canada more easily. This will have serious consequences on Canada’s cities and rural communities.

Even as Toronto grows in tech luster and Montreal remain mostly just an academic hub, the most beautiful towns could become more attractive in more rural locations in Canada. So in terms of ROI, getting educated in Canada for an international student might still be one of the best possible decisions given the amount of opportunities in this new WFH remote work dynamic.

Zoom towns and the rise of Toronto are bound to be a big part of this. In LinkedIn’s top Startups in Canada list, the vast majority of them are located in Toronto. Staying in Canada but are a top tier engineer? Chances are you will still be working for an American company, maybe even a BigTech firm.

That’s pretty crazy!

Thanks for reading!

Finally as Kamil notes, if you like the idea of building a better business model for writing (and podcasting and video) and you're in the market, Substack is hiring remotely throughout Canada, at US market rates. Take a look here: https://substack.com/jobs.