World sees window of tech opportunity
U.S. immigration policies lead firms to open elsewhere
GUADALAJARA, Mexico — With his frequent refrains about Mexicans and the need for a wall to contain them, it is no surprise that President Trump has made few friends in Mexico.
Yet here in the capital of Jalisco state, sometimes referred to as Mexico’s Silicon Valley, people are practically celebrating him.
“He’s helping us a lot!” Gov. Aristóteles Sandoval exclaimed. “He’s put us on the world’s agenda.”
As part of Trump’s efforts to push an America-first philosophy, he has vowed to restrict the availability of special visas that are widely used by technology companies to hire talent from around the world.
Trump’s plans, combined with a U.S. political climate that has left many immigrants feeling less welcome, has cast a pall of uncertainty over the U.S. tech industry, which relies heavily on highly skilled workers from abroad.
But while entrepreneurs and executives in the United States are fretting, other countries — including Mexico, Canada and China — are salivating over the Trump administration’s rumblings. Silicon Valley’s loss, they say, could be their gain.
In recent months, foreign governments and tech industry leaders have sought to capitalize on the uncertainty in Silicon Valley. They are stepping up their efforts to attract engineers and entrepreneurs who might rely on the special U.S. visa program, known as H-1B, to work or to run businesses in the United States.
“It’s an exciting time,” said Brad Duguid, the minister of economic development in Ontario, where Toronto is one of Canada’s biggest tech hubs. “And while it’s unfortunate that the U.S. is looking more internally, far be it from us not to take advantage of that.”
In June, Canada set up a visa program that makes it easier for companies to recruit highly skilled foreign workers. Under the program, which was in development before Trump’s election victory, the Canadian government has promised to approve two-year visas in less than two weeks — blindingly fast compared with the process in the United States.
And unlike the H-1B visa in the United States, there is no limit to the number of visas available.
Beyond that, Ontario is in the early stages of preparing a social media campaign for technology executives around the world to sell the province as a place for investment.
“Canada is seizing its moment,” said Navdeep Singh Bains, the country’s federal minister of innovation, science and economic development. “We’re open to trade and people.”
In Mexico, states with growing regional tech hubs, like Jalisco, have been redoubling their efforts to attract talent and investment in recent months, peddling a philosophy of openness that departs from what Sandoval called Trump’s “xenophobia” and “lack of global vision.”
The efforts have included visits by Jalisco officials to the Bay Area and to Europe. The Chronicle published an opinion piece by Sandoval pitching the advantages of doing business in his state.
The officials herald Mexico’s proximity to Silicon Valley, its alignment with time zones in the United States and its lower cost of living. They are also sweetening the invitation with enticements like tax incentives and promises of full government cooperation.
China’s tech leaders have also been seizing the opportunity created by Trump’s immigration policies.
Wang Huiyao, founder and president of the Center for China and Globalization, a research group in Beijing, said Trump’s “America First” doctrine was a boon for China’s efforts to attract foreign tech talent and persuade Chinese engineers working abroad to return home.
“China is shifting from attracting foreign capital to foreign talent,” Wang said. “The U.S. is losing out.”
In an executive order this spring, Trump directed federal agencies to review immigration laws with an eye toward ending what he called “the theft of American prosperity.”
The president has taken particular aim at the H-1B visa program, under which the government admits 85,000 highly skilled foreign workers every year, most of them in tech.
Trump says businesses use the program to avoid hiring higher-paid Americans, and his executive order instructed the agencies to ensure that visas were awarded to the most skilled, best-paid immigrant workers.
Disney, Toys R Us, Southern California Edison and New York Life are among the companies that have laid off U.S. tech workers who first were asked to train their replacements — tech workers from low-wage countries like India brought in on temporary visas. In some cases, the jobs themselves went back home with the new workers.
Canada revised its temporary visa program partly because the Royal Bank of Canada, the country’s largest financial institution, shuffled jobs overseas using that technique.
Trump’s executive order made no immediate changes, but it has sowed concern throughout the industry. Competition for H-1B visas was already intense. The government received 199,000 applications in the first five days of its lottery this year, then stopped accepting them. Many companies fear that Trump’s efforts might put highly skilled immigrant workers even further out of their reach.
A change could favor the biggest U.S. tech companies, which tend to pay the highest wages. But it could hurt some of the biggest users of the H-1B program — the outsourcing companies, including several from India — that bring thousands of workers to the United States on lower wages to handle computing tasks for banks, health care companies and other firms.
It could also hurt startups and smaller firms without the cash to compete on salaries.
Adding to the uncertainty, the Trump administration said last month that it would delay, and perhaps eliminate, an Obama-era rule allowing thousands of foreign entrepreneurs to move to the United States every year to build startups.
“People here are extremely nervous,” said Andreas Kraemer, managing partner of MITA Ventures, a San Francisco venture capital firm. “This whole area is driven by immigration.”
León David Pérez, president of Propulsar, a Mexico City company that develops tech startups and has an office in San Francisco, argued that Trump’s policies could jeopardize Silicon Valley’s culture of creativity.
“When you want to spur innovation, the best way to generate it is to employ the greatest diversity of people,” he said. “That’s what’s being threatened with Trump’s policies.”
The uncertainty in Silicon Valley — combined with the invitations from around the world — have already begun to lead some tech companies and entrepreneurs to rethink the valley’s gravitational pull.
Business interest in Jalisco has soared since Trump’s election, leaders in the state’s tech sector contend. Trump’s immigration policies, said Jaime Reyes Robles, Jalisco’s secretary of innovation, science and technology, have been “our best marketing.”
In 2003, Manuel Gutiérrez Novelo, a Mexican engineer, moved to Silicon Valley to develop TDVision Systems, a company specializing in 3-D technology. He went on to develop a multipronged operation based in California, with offices in Europe and Asia.
But in recent weeks, he uprooted his businesses and moved them back to Guadalajara, his hometown. Trump’s efforts to restrict immigration were a big reason, he said, calling them anathema to his company’s philosophy and a potential barrier to hiring foreign workers.
“If I saw Donald Trump, I’d tell him he has lost my business,” he said.