Brain Drain: A Non-Issue or Misunderstood Advantage?

This content is written as response to this article: https://achintyac.substack.com/p/brain-drain

Brain Drain: A Closer Look

Worrying is a common human trait that I am trying to help my kids deal with.  I have explained to them that it is a waste of energy to worry about things we cannot control or about non-existent problems is unproductive.

The Canadian tech ecosystem often expresses concern about the "brain drain" – the emigration of skilled workers. This issue is frequently discussed, with new angles of worry emerging regularly. However, much of this concern is misplaced.

The brain drain is long term beneficial on the long-term via the boomerang and very few people want to take the simple hard actions to reduce the brain drain.  

The brain drain is beneficial on the long term, as many individuals eventually "boomerang" back to Canada, bringing valuable experience and expertise. Additionally, few are willing to take the decisive steps needed to truly address the brain drain.

Brain Drain is one side of a working economy

Migration between countries is a natural occurrence. Each year, 0.5% to 0.7% of the global population migrates. Of these migrations, 60-70% are for economic reasons, while the remainder are due to conflict, natural disasters, and other factors.

Net Migration Trends

Over recent years, several regions have seen significant net migration:

• UAE, Qatar, and other Gulf states: Often 10+ per 1,000 people

• Canada: ~6-8 per 1,000 people

• Australia: ~5-7 per 1,000 people

• United States: ~3-4 per 1,000 people

• Many European countries: ~2-5 per 1,000 people

Recent political situations have led to Canada experiencing higher net positive immigration than the US. However, it's widely believed that Canada loses more high-potential early in their career tech talent to the US then we gain from emigration. 

Why Brain Drain exists

Most people believe that higher salaries paid by US startups and tech firms are the main raison for brain drain. On the surface this appears to be true but in reality the salaries are comparable when you take local cost of living into account. (To keep this post short we won’t go into details here but if there is demand we can write another post).

In reality, the primary reason people move is the perceived opportunity for career acceleration and more engaging challenges. Silicon Valley is known as the place to start and grow a tech company, has a high concentration of talent, and the names of its fast growing and established startups are known globally. In addition, the companies that are recruiting Canadian talent are talent aggregators. They are established companies (e.g. Meta) or hot start-ups (e.g. Antrophic) who are in a position to and willing to pay the highest salaries in the industry. 

Therefore, the attraction is not simply the salary, but the prestige of joining established known start-ups and living where the “action” is happening. This is similar to professionals in finance moving to NYC or London, or those in the film industry moving to LA. It's a natural draw for those seeking exciting career opportunities.

Driven and accomplished individuals are often the most likely to move for economic reasons. They are willing to make the effort and sacrifices to establish themselves in a new city.

The Boomerang Effect

The thing is in the long run, the brain drain often leads to a "boomerang" effect, where individuals return to Canada with enhanced skills and experiences, strengthening the ecosystem.

When I graduated from McGill there were concerns of a large brain drain. 30 of the top 50 graduates from my class at McGill moved to NY to work in finance. 20+ years later about half of us have  returned to Canada and are leaders in our fields due to our experience and connections. 

Similarly, studies show that a significant percentage of Canadian tech-startup founders have prior international work experience.

• A study reviewing 300 Canadian tech startup founders on LinkedIn found that 41% had worked for foreign multinational tech firms in Canada, and an additional >25% had most of their prior experience outside Canada. This implies that roughly two-thirds (≈ 66%) of founders bring significant international work experience to their ventures.

• We analysed the 78 Canadian tech companies listed in the Globe & Mails $100m club article and found that 58 (≈ 74%) had at least one founder with substantial pre-founding work or study experience abroad, primarily in the U.S. (47 founders), U.K. (22), EU (12), and Asia (9). If you eliminate the companies started by founders prior to graduating university (e.g. Workleap, Freshbooks, etc.) the proportion would be higher. 

Brain Gain

It should also be noted, that on the other side of the migration issue, Canada also benefits from "brain gain" as immigrants account for about one-third of business owners with paid staff, playing a significant role in the broader small-business landscape.

Addressing Brain Drain

Addressing brain drain is not solely the government's responsibility. Solutions include:

• Increased Salaries: Founders can increase salaries, and venture capitalists can provide additional funding to support this.

• Highlighting Success Stories: Promoting the unique aspects of Canadian tech ecosystems and sharing stories of successful startups. TechTO is launching a national event series to highlight the success stories that no one is talking about, check out our first event in Vancouver here.

• Encouraging Entrepreneurship: Founders should encourage early employees to start their own companies, increasing the startup and talent density.

• Patience: Allowing later-stage companies to develop, which leads to higher pay and greater talent density.

It is more beneficial to focus on promoting Canada's tech success stories than worrying excessively about brain drain.