As the Canadian dollar continued its slide into the new year, executives at U.S.-based Fortinet (Nasdaq:FTNT) couldn’t help but take notice.
The security software developer, which was founded in B.C. before moving its headquarters to northern California, employs approximately 2,800 globally and 550 locally.
The dollar’s decline has made it even more appealing for the tech company to ramp up recruitment in Canada, according to Fortinet human resources manager Joyce Chow.
“It’s something we’re starting to talk about because the dollar seems to [have been] low for a little while now,” Chow said, adding the company has 76 open positions in Canada and plans to add “many, many, many more” jobs soon.
“From a recruitment standpoint, it’s definitely going to help.”
A company whose revenue comes primarily in U.S. dollars will simply get a bigger bang for its buck if more operating costs are in Canadian dollars – a currency that has fallen US$0.10 in six months.
The strengthening U.S. economy and plunging oil prices have pushed Canada’s dollar to a six-year low, and the Bank of Canada’s January 21 decision to lower its key interest rate to 0.75% from 1% further sent the loonie’s value tumbling to US$0.81 by day’s end.
“Generally, the cost of employing good talent in Vancouver is lower than in the Silicon Valley,” said Ian McKay, CEO of the Vancouver Economic Commission.
“The recent currency moves have strengthened that advantage a little bit.”
Outsourcing hiring firm Freelancer.com, which is based in Sydney, Australia, and opened development offices in Vancouver in March 2014, expects to double the size of its B.C. operation to 20 employees by the end of 2015.
“Most of our revenue comes in U.S. dollars and most of our costs are in Aussie dollars,” CEO Matt Barrie told Business in Vancouver.
“That’s all fantastic for us because the [Canadian] currency is moving in the right direction.”
He added that Canadian wages are on par with Australian wages, but it’s more expensive to hire talent in the Silicon Valley. So when Barrie decided to open an office in North America, he said lower costs in Vancouver were a big factor in the decision.
And recruitment isn’t the only aspect of the tech sector benefiting from the lower Canadian dollar.
“There’s not as much venture capital available in Vancouver as there is in similar markets in the U.S.,” said Rick Nathan, managing director of Toronto’s Kensington Capital Partners.
“It attracts a number of U.S. investors to reach across the border for investments, and that’s happening even more now with the declining value of the Canadian dollar.”
But McKay said part of what will keep Vancouver’s tech sector sustainable is attracting sizable offices for U.S.-based tech companies like Amazon (Nasdaq: AMZN), Facebook (Nasdaq:FB) and Microsoft (Nasdaq:MSFT), which has been “hugely helpful” for building the city’s brand when recruiting talent.
“They recognized what’s happening on the ground here in Vancouver. There’s some extraordinary, edgy innovation that’s going on.”
McKay added the dollar’s decline helps with recruitment in the short term, “but you can never sort of bank on it because you can’t control or forecast what currency markets are going to do over the long run.”