Is the U.S. Facing a Tech Exodus?

Is Silicon Valley considering a move abroad?

Senator Chuck Schumer has set a June deadline to pass the comprehensive immigration reform bill introduced this week. But that may be too late for some U.S. entrepreneurs, who say they are considering moving operations abroad in order to hire high-skilled workers.

“If we can’t hire in the U.S., we would consider opening up international offices to get that employee,” says PaperG co-founder and CEO Victor Wong, whose advertising startup has offices in San Francisco and Kirkland, Washington.

Wong says the lottery system for H1B visas for high-skilled workers, which are currently capped at 65,000, has made it difficult for fast-growing startups to hire talented employees. The new bill would raise that limit to 110,000.

“We’ve had a few candidates that we’ve extended offers to – or wanted to – but because of available visas, we’ve had to turn them down or not even try to file for them. If more candidates were available that were U.S. citizens, it wouldn’t be a problem, but we’re just not finding enough of them,” says Wong.

Looking for the Best and the Brightest Abroad Major companies like Facebook, Google and PayPal agree.  Last week, Zuckerberg and other tech leaders announced the formation of a political advocacy group called, whose aim is to “keep the American workforce competitive in the global economy.”

“Modifications to the guest worker program must also include an increase in the number of H-1B visas to attract the world’s best and the brightest workers, while implementing reforms that encourage this talent to permanently reside in the U.S.,” the group wrote on its website.

Meanwhile some other countries, including Canada, Australia and Chile, have put out the welcome mat for high-skilled workers and entrepreneurs.

“We are aware of immigrant entrepreneurs who cannot get permanent residency in the U.S., so we’ve created an avenue for them to settle in Canada permanently,” says Jason Kenney,

Canada’s Minister of Citizenship, Immigration and Multiculturalism. “We are making reforms to our immigration program to improve prosperity … We want to attract the world’s best and brightest.”

At the start of April, Canada began accepting applications for its new “startup visa.” Kenney says qualifications for the visa include at least one year of post-secondary education, as well as an active involvement in a startup receiving at least $200,000 in capital from Canadian investors.

Canada’s courting efforts and the hiring challenges faced by U.S. entrepreneurs make immigration reform that much more pressing, says Engine Advocacy cofounder Mike McGeary, who speaks on behalf of the startup community.

“It speaks to the absolute necessity to keep people here who are getting their education here. We want to keep them here to open business! Canada, Chile, South America – they’re trying to attract the immigrant population in the same way we used to do with Ellis Island,” says McGeary.

Who Are Biggest Losers in H1B Lottery? Wong says larger companies with international footprints, such as Google and Facebook, have a significant advantage over fast-growing startups when it comes to the H1B lottery process.

“Google can extend an offer to potential employees knowing that if they don’t get a visa, they can put them in a foreign office and try again in the next round,” says Wong. Lacking an office abroad, Wong says the lottery process often suffocates his company’s hiring efforts.

And even if the company wins a slot out of the lottery, PaperG co-founder Ka Mo Lau says the six-month window before the H1B visa holders are able to begin work is a second hurdle for fast-growing companies. PaperG currently has 33 employees, but Lau says the company is trying to hire an additional 15 staffers by June, and will likely need 60 by end of year.

“To create actual, net new jobs and add net new value to stimulate the economy, we need to allow companies to hire internationally or at least have the flexibility to do so,” Wong says.

Others aren’t so sure that the only path to growth is through international workers.

“We have no lack of skilled workers. What you have is businesses who would prefer to hire H1Bs and would prefer not to train workers. They’re looking at the U.S. government like a personnel agency,” says Ira Mehlman, a spokesman for the Federation for American Immigration Reform (FAIR).

Mehlman even suggests that ageism may be to blame, responding to startups’ complaints that there aren’t enough skilled Americans looking for jobs.  He says high unemployment among 40-something tech workers shows many companies in youth-driven Silicon Valley are unwilling to retrain talented American technologists past a certain age, whose skills might need a little updating.

“The high-tech industry is not any different than the construction or agricultural industries,” says Mehlman. “They’re looking for the largest possible pool of talent for the lowest amount of wages.”

But both Lau and Wong disagree that startups in the United States are looking for a “discount” when they try to hire foreign workers.

“I think there are some really smart people here—there just aren’t enough of them,” says Lau.

“Some companies are paying employees $100 to every qualified lead they bring in. That speaks to the level of desperation.”