Why Microsoft Loves Richmond, BC
Here, the company can import foreign tech workers, and maybe prod US lawmakers.
Bill Gates: Cool Canada?
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.
![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
driftwolf
06-11-2007
Deluded.
Anyone who thinks that Microsoft is actually going to hire any Canadians for their "Canadian" office is sadly deluded. Oh, sure, they might hire a few local managers for long term continuity. The rest will be poorly paid visa workers that they'll use, abuse and send home when they're done.
It'll be profitable for Microsoft - very much so. It'll give the city a (very small) increase in taxes paid - maybe. But it's not the high-tech haven that I've been hearing bandied about by people who should really know better.
werdnagreb
06-11-2007
looking forward to Microsoft coming
I think this is great news for BC and Canada in general. Microsoft will hire the best employees it can. Period. Those employees may be Canadian, but they may also be Chinese or Indian. And even if they are foreigners, then what's the harm in bringing in some highly skilled people into the country? A few may decide they don't like Microsoft any more and decide to start their own companies.
UBC, UVic, and SFU all have world class computer science departments, but after graduation many of the top students leave BC because the best jobs are elsewhere. It doesn't have to be this way.
Frank
06-11-2007
Disconnect
Wait a sec, I thought the proponents of globalization were always saying it would help the developing world to locate more workplaces overseas?
How does it serve the developing world to see their best leave their countries if at the same time the Right says it is terrible for Canada if our best leave Canada?
Fiat lux
07-11-2007
This is the beginning and
This is the beginning and part of the "free movement of business persons", dreamed about and planned by the corporate mafia for many years, especially now under TILMA and the SPP rackets.
The main purpose of a "competitive economy" is to lower monetary labour costs by either replacing humans with incredible waste of other forms of physical, especially electrical and oil based energy, or make it more "competitive", with imported labour, forcing people to beg for jobs at any wage.
Meanwhile raising prices to the public and stealing higher profits.
In short: Costs can not be cut only transferred on other sectors, the environment and the future.
This is an excellent example of this law.
Future generations, all over the world, will pay very bitterly and dearly for this presently ruling criminal neoclassical, globalized market economic theory and curse our generations and memory.
Another reason is the worthless US dollar and the collapsing US economy, caused exactly by this same theory, with corporations looking for lifeboats somewhere else.
My feeling is that big business is planning to cause a worldwide economic depression, so the can force humanity to beg for a global corporate dictatorship.
In any case, thanks to our politicians and economists, it is goodbye democracy.
Watch the rising gold prices, showing that the big speculators are deserting fiat monies, knowing exactly what is and will be happening, and making it happen.
Ed Deak.
funniously
07-11-2007
No disconnect in this case.
South Korea is not a developing country (and hasn't been for about 20 years now).
Frank
07-11-2007
South Korea
So its just for South Koreans to work in Canada?
Why not put it in South Korea?
alive
07-11-2007
the mighty fall!
about the downfall of the US:
GM is considering manufacturing some of their German Opel line in the US because "the wages are lower there!"
Fiat lux
07-11-2007
Some European wages must
Some European wages must indeed be very high and I have no problem with it.
We have a small Swiss colony here, and some of the men, including our own partner, go back for a couple of months every year to make enough money, somewhere about $10,000+ per month, so they can afford to live in Canada.
On the other hand many German cars are now made in China, bearing the Made in Germany tag. I have this from a friend who goes to China several times a year on business.
In short, the whole damn world is being exploited, led up the garden path and going crazy in the hands of the corporate mafia.
Wait what will happen when the SPP kicks in and all Canadian forestry and mine workers will be laid off and fired, replaced by imported labour.
Ed Deak.
werdnagreb
07-11-2007
Why the fear?
I used to think that Microsoft was an evil empire. Sure, they have made quite a few business decisions in the past that I disagree with and I think have been harmful. But, on the spectrum of things, Microsoft is fairly benign. Their business model is not innately carbon intensive (compare this to oil and auto companies). They are not directly encouraging an obesity (compare this to Archer-Daniels-Midland, or Frito-Lay). Etc.
realisticman
07-11-2007
FIAT LUX
Would you say the same if Nissan were going to manufacture in Canada, Ed? How do you feel about that Anglo/Dutch company Shell
All bad?
realisticman
07-11-2007
WEST
That's a regulatory issue, are you too saying, that because they lost anti-trust cases we don't want them here?
G West
07-11-2007
It's not a regulatory issue
That's completely disingenuous. Microsoft's anti-competitive activities and their attempts to ruin their competition are well known and they have been adjudicated as being guilty of such in numerous court cases - as you well know. Dishonesty is not a regulatory matter and Bill Gates’ emails provided all the evidence any honest observer would have needed to come to that conclusion. In my view.
Do I hate them? No. What I hate is the gullibility of people who assume that anyone with a few million dollars is some kind of corporate hero.
Like all 'globalizing' initiatives the only good of the firms involved is their own good.
Microsoft's move to Richmond has little or nothing to do with Gates wanting to 'help' the Canadian economy - or the transplanted workers from Korea...it's simply the easiest and cheapest way for MS to further penetrate the insane Korean gaming market. The objective is to circumvent US rules about visas and keep costs down - thereby increasing potential profits on future sales of goods with a marginal cost after development of a close to zero cents as it is possible to be.
I don't think either Frank or I would say we don't 'want' microsoft here - for my own part, I'm simply interested in pointing out that the idea of encouraging these folks to re-locate here is double-edged sword. And that Microsoft is NOT a good corporate citizen by any fair definition. Don't be surprised at anything they might do (or not do) because the only thing that matters to any of them is the bottom line.
moodyguy
08-11-2007
Foreign Workers
Foreign workers start their own business???
The issue here is not immigration or freedom of movement. Foreign workers in Canada or elsewhere have neither. Rather they are allowed into the country, not to move here and work, build a life, probably a family of new canadians and contribute to the economy here and in their home countries through remittances of good salaries but rather to work, with family outside the country and tied to a specific employer who sponsors them generally at pay rates that would not be paid in the local (Canadian) labour market. If that employer no longer needs them, out they go.
By all means attract more immigrants but please do not confuse immigration, which we have historically had in Canada, with foreign worker programs which have been rare here (but are currently rapidly growing quietly) but are the source of cheap semi-slavery throughout much of the developing world.
funniously
08-11-2007
Unregulated Migrant Labour vs. Foreign Worker Programs
Before the introduction of formal guest worker programs and associated visas, migrant labourers were even more vulnerable to exploitation by employers as they typically worked under the table without any legal status to protect them. The rationale behind government-regulated guest worker programs, whose introduction was prompted largely by the labour movement, was to introduce oversight and regulatory standards to areas of employment which previously had little or none (farm workers and live-in caregivers are the best examples), thereby reducing the possibility for exploitation. The programs create an agreed-upon framework of rights and responsibilities between the employer and the worker that is subject to government oversight.
I say this in order to point out the historical timelines. Migrant labour as a phenomenon pre-dates current guest worker programs (by several millenia!) and is extremely difficult to monitor, much less manage. Guest worker programs exist (in theory) to protect workers who seek to come to find employment in Canada on a temporary basis. They did so anyway when there was no regulation at all, and many suffered miserably. Take a look at how migrant Asians in the Middle East are still being treated today and you'll see how far we've come. The programs have their flaws to be sure, but they were a victory for the Left that ought to be advanced and refined, not denigrated.
Capitalism
08-11-2007
No Surprise!
No surprise to see some on this site viewing this with a degree a cnyicism. What is there to debate here...
(1) The Indians are better programmers and are willing to come over for a fraction of the salary.
(2) US immigration laws are tougher. Canada might also be a preferable destination.
(3) This will be good for the economy. 800 jobs always is.
(4) It is good for BC Business. We need the more presense of more foreign multinationals in Vancouver. They all go to Calgary or Toronto.
(5) With Microsoft comes Community involvement. It is a very charitable company. Better tech minds will also be drawn here.
(6) The spill-over effect will be measurable. Other tech companies in town will spring up to meet the needs of Microsoft.
A Win-Win!!
Frank
08-11-2007
Hey Cap
The Indians are better programmers than us? Where's the citation for that? They are willing to work cheaper, no argument there.
Hiring 800 people from other countries to come here and work for a foreign company is good for Canada? How so? Also, how is it good for the countries they left since you guys are always telling me globalization is good for developing countries.
You forgot the "why" part.
Well, I imagine another Richmond coffee shop will be needed and a couple more lunch joints but again, how does that benefit developing nations?
zalm
09-11-2007
Dead wrong
Indians are well trained, but still do not perform adequately in teams. A Microserf of my acquaintance notes that India is largely used for bug fixes, testing and debugging, and inhouse stand-alone projects not requiring interoperability. Everything coming out of India is sent back to Redmond (codeword for elsewhere in the States, not just Redmond) to test for interoperability issues, user and syntax conflicts, and multi-platform testing.
As well, Microsoft does not write many of its applications any more. Much of what exists in XP was purchased outside Microsoft by buying up companies that had applications that were more useful and/or better structured to perform tasks that Microsoft thought would add value. That it also removed a competitor was also germane to the business decision.
What MS does write is the platform and administration code to launch the various applications that it supplies, or that are supplied by others such as Adobe, Corel, etc.
Reminds me very much of another friend who owned a mapping company here in town from the mid 1980s to 1995, and was first out of the starting blocks with digitized information, then computerized survey overlays from digitized data, and last 3-D plots from digitized data. He later sold out to 3DI who went broke a year ago and shut the doors. They too purchased expertise in the Czech Republic and South Korea, and found that it was only the relatively cheap labour that helped make the investment economical at all. Since the bulk of their contracts since 1988 were from digitized data, not coincidentally from the US and Canada, they were well set-up to do only this high-tech kind of work. The manual plots of non-digitized data was farmed out to the divisions in the Czech Republic and South Korea, but each required the services of one full-time person checking the data (quality control) and sending every file back as many as a dozen times for replotting or rework.
It still kept the dollars coming in the door, but it never turned a profit for them, even though they paid between 15 and 30% of the cost of labour in Canada for the same service. That's how inefficient re-work is.
No doubt you'll find considerable agreement from the others in Microsoft, not just my acquaintance the team leader.
zalm
09-11-2007
Oh yeah....
Indians over here get the same salary that we white guys do. There's no racist scale of pay like there is in Saudi.
KevinC
09-11-2007
It's a funny old world
Here we have a story in which Canada is for once on the winning side of a globalization event, and yet all the doom and gloom and negative spin?
I had to rub my eyes and make sure I wasn't reading a story on a German web site. (I live in Germany, the land that invented pessimism.)
realisticman
09-11-2007
Thanks
for the perspective, zalm.
It's all global now:
http://www.hindustantimes.com/StoryPage/StoryPage.aspx?id=2bdae194-5494-46b2-81ba-70d8634247be&MatchID1=4585&TeamID1=1&TeamID2=8&MatchType1=1&SeriesID1=1151&MatchID2=4587&TeamID3=3&TeamID4=5&MatchType2=1&SeriesID2=1152&PrimaryID=4585&Headline=Indian+firms+hiring+US+staff%2c+reversing+trend
Terming it reverse "offshoring", a new report names India's largest offshoring firm Tata Consultancy Service Ltd (TCS) and software giants Infosys and Wipro among them and saying some American workers laid off are now re-employed in Indian outfits after training in India.
Wipro Ltd, for instance, is scouting US locations for two big software writing centers that eventually could employ hundreds of programmers each. Cities on its short list include Austin, Tex, and Atlanta, because of their deep tech-talent pools and reasonable salary costs, the leading business magazine says.
Frank
09-11-2007
KevinC
Did you read the article?
An American company wants to use a building in Canada to employ some foreign workers which, due to visa issues, are more difficult to bring into the US, and you want to cheer Canada "winning" a globalization event?
Let's see, when the immigration issues are settled and it actually opens we will get a bit of additional tax revenue from the foreigners doing the work on our soil without it having cost us any money to educate those workers.
That's pretty stirring, I can almost feel a spontaneous singing of the national anthem coming on.
G West
09-11-2007
Yep! THAT'S GLOBALIZATION....
Moreover, it's doing sweet bugger all for between 85 and 96 percent of the world's population while providing many “opportunities” for 30,000 Canadian elitists and the children of self-important elitists to play at 'making a difference'.
Actually, it is making things worse because it demeans people in those countries; tells them, in effect, that their cultures are crap and that they should drop everything and move to a city somewhere so the globalizers can set up their slave operations. “Slave” operations like the maquiladora that are - sometimes run by those self-same nicely scrubbed smiley-faced kids from Canada and middle America.
Running little operations whose drive for higher profits have led them to Mexico in search of lower wages. South of the border they can also avoid health, safety and environmental restrictions, and real effective unions. In Tijuana, workers arrive from the south of Mexico in search of a better life. Instead, they find that the U.S. and Asian owned plants barely provide enough to survive. With an average of $25-$35 for a 48-60 hour week, maquiladora workers cannot afford to rent housing, and must build their own shacks on land near the companies. The incidence of birth defects, miscarriages, and disease has shot up in these areas where plants have dumped their toxic wastes with abandon. Efforts to improve conditions have been met with brutal repression.
The utter conceit and arrogance of the whole concept is beyond belief.
PITY, ISN'T IT?
dave49
12-11-2007
Past activities of Microsoft in BC.
It might go back about 14 years, but when I lived in an apartment in Kitsilano, one of my neighbours worked as a programmer for Microsoft. I don't recall the reason, but they then dicided to shut down the whole operation in BC. Some people were asked to re-locate to Washington state, but not my neighbour.
There had to be some story behind Microsoft's return after all these years. This is nothing more that the application of the human intellect to find and exploit loopholes.
A major example of that is the recent takeover of Aliance Atlantis by a joint venture of CanWest Global and some New York Investment house. CanWest supposed has 51% of the control, but only put up 20% of the money. This is a way around government rules requiring majority Canadian control and we are letting them undermine the intent of this rule. Be afraid for the soverignity of Canada!
Check on Google and you find references to a Fortune article about two years ago where Bill Gates admitted his main rival when it came to attracting highly intelligent people to his company was New York's financial sector.
Either way, the story is really about finding and exploiting loopholes, not real economic development.