GLOBAL WORKFORCE BENEFITS IN YOUR BACKYARD: WHY CANADA IS THE NEW FRONTIER FOR U.S. NEARSHORING

In an era where businesses increasingly seek cost-effective and strategic ways to grow, nearshoring has emerged as a compelling option over the increasingly challenging traditional options. For U.S. companies, Canada presents a particularly attractive choice for expanding their workforce. From favorable geographic and economic factors to operational efficiencies and political friendliness, the benefits of nearshoring to Canada are numerous and profound.

REASONS US COMPANIES ARE EXPANDING TO CANADA, NOT ASIA

Over the past decades, Asia has been the go-to place for offshoring manufacturing and operations for cost efficiencies due to its access to an enormous, young and inexpensive workforce. However, the offshoring trends and growth have proven unsustainable. As the pendulum swung to Asia’s advantage, costs have dramatically risen with employees demanding higher wages, and there have been increased risks to intellectual property, quality control and cybersecurity threats.

Ongoing geopolitical tensions and high U.S. tariffs have further complicated matters, leading companies to shift away from Asia as the primary export platform for North American markets. This has prompted a recent trend of reshoring to the U.S. and nearshoring to closer countries like Mexico and Canada.

Many U.S. companies have already taken advantage of investments in Canada, the neighbor to the north. The strong currency exchange, shared time zone, language, culture and geographical proximity make nearshoring teams in Canada an appealing choice. All these factors contribute to stronger team communication and productivity while benefiting from cost savings compared to U.S. standards.

THE CANADIAN TALENT ADVANTAGE

Furthermore, Canadian talent is a driving force behind the decision to expand into Canada. The high-quality education system creates a highly skilled labor force that is generally more cost-effective than local employees. Some Canadian universities, such as the University of Waterloo, the University of Toronto, and the University of British Columbia, have significant alumni in Silicon Valley and produce an annual pipeline of graduates who work for high-growth U.S. companies. While the skill sets and quality of talent remain high, the salaries generally do not reach the same peaks as American salaries. Whether looking to hire junior or senior talent, Canadian employees have proven to be a valuable asset.

CANADIAN IMMIGRATION: AN ATTRACTIVE ALTERNATIVE FOR U.S. CORPORATE IMMIGRATION

The American H-1B visa program, designed to bring highly skilled foreign workers to the U.S., has become increasingly complex and competitive. With annual visa caps (currently capped at 85,000 per year) and lengthy processing times, many companies struggle to secure H-1B visas for their talented foreign employees. As a result, employees may lose work authorization and must leave the country. The H-1B visa program poses several challenges for U.S. businesses hiring foreign employees. Each year, the demand for H-1B visas typically exceeds the supply. Companies may feel out of options relying on a lottery system that randomly selects individuals to determine who can apply for the visa.

Canada stands out in the race to attract global tech talent, offering many advantages for foreign companies seeking to hire or retain talent. This includes a lower cost of doing business overall, possible tax breaks, and a streamlined immigration process that is more predictable than the U.S. system. Canada’s world-class immigration program is a great option for Canadian and foreign businesses who want to hire foreign talent. Employers can speed up the process of hiring foreign workers to fill specialized jobs in a matter of weeks.

BENEFITS FOR IMMIGRANT EMPLOYEES

It’s no surprise that Canada is a desirable option for immigrants, especially when compared to the uncertainty of life on a work visa in the U.S. Employees can even move back to the U.S. in the future, with new experience gained while working in Canada — opening up new immigration pathways to the U.S. If the employee becomes a Canadian citizen, business travel becomes significantly easier as Canadian citizens don’t require visa stamps from a consulate abroad. It would also benefit them when reapplying for a Green Card (U.S. permanent residency) because they wouldn’t have to wait as long as when they were applying from countries such as India or China, which have a greater backlog.

THE ECONOMIC AND OPERATIONAL ADVANTAGES

Canada’s economic landscape offers additional advantages that make it an attractive nearshoring destination. The country’s stable economy, robust infrastructure, and supportive business environment provide a solid foundation for U.S. companies looking to expand. Canadian cities consistently rank high in terms of quality of life, making them appealing locations for employees to live and work. This can lead to higher employee satisfaction and retention rates, which are crucial for maintaining a stable and productive workforce.

LOWER HEALTHCARE COSTS

Moreover, Canada’s healthcare system provides a significant cost advantage. With publicly funded healthcare, the burden on employers to provide extensive health benefits is reduced, leading to lower overall employment costs. This can be particularly beneficial for U.S. companies used to the high healthcare costs in the United States.

LEVERAGING TECHNOLOGY AND INNOVATION

Canada is not just a hub for talent but also for innovation. The country’s strong emphasis on research and development (R&D) and its supportive government policies make it a breeding ground for technological advancements. U.S. companies can tap into this innovative ecosystem by nearshoring to Canada, gaining access to cutting-edge technologies and practices that can drive their growth and competitiveness.

Several Canadian cities, including Toronto, Vancouver, and Montreal, are renowned for their thriving tech scenes. These cities are home to numerous startups and established tech companies, creating a dynamic and collaborative environment for innovation. By establishing a presence in these innovation hubs, U.S. companies can benefit from the cross-pollination of ideas and technologies, fostering a culture of continuous improvement and growth.

As global workforce trends continue to evolve, Canada emerges as a strategic nearshoring destination. Its skilled workforce, cultural alignment, and cost advantages make it an ideal choice for U.S. companies seeking to diversify and strengthen their global workforce.

Nearshoring to Canada and partnering with PEOs offers U.S. companies a range of benefits, from lower healthcare costs and cultural alignment to advantageous time zones and currency savings. The combination of these factors creates a compelling case for considering Canada as a strategic expansion destination. However, hiring employees in a new country can be daunting and burdensome. As PEOs we are uniquely positioned to help our clients take advantage of these benefits.

To fully realize these advantages and navigate the complexities of international employment, partnering with an Employer of Record (EOR) or PEO can be a game-changer.

As PEOs, we provide the expertise and infrastructure necessary to streamline HR, payroll processes, and navigate provincial compliances, allowing U.S. companies to focus on growth and innovation. By leveraging the benefits of nearshoring and the support of an EOR, U.S. companies can expand their global footprint efficiently and effectively.