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No H-1B, No Problem: Tech Companies Set up Foreign Workers in Sunny Guadalajara

April 3, 2017
Why not park your non-American workers a four-hour flight from San Francisco?

There’s a tech-loving governor in Mexico who sees opportunity in the hassles the Trump administration might create for companies eager to hire foreign engineers and coders: He’ll find cubicles for them.

Aristoteles Sandoval has been making his pitch to Silicon Valley, selling what he considers the world’s second-best technology nerve center to the likes of Facebook Inc. and Tesla Inc. If you can’t import the talent you need, Sandoval has been telling them, there’s a way around the problem in Guadalajara. After all, most of the big companies have research centers, factories or satellite offices in the picturesque city. Why not park your non-American workers a four-hour flight from San Francisco?

“We’ll take you,” Sandoval, 43, said, sleeves rolled up and hair slicked back as he sat at his desk in Casa Jalisco, the official residence of the governor of Jalisco state. “We’re tolerant and inclusive and think talent has no borders. Brilliant minds will always have a place here.”

That could, and should, be interpreted as a dig at U.S. President Donald Trump, who has galvanized the industry with orders to ban immigration from some mostly Muslim countries and freeze the expedited processing of H-1B visas for specially skilled workers. And the Citizenship and Immigration Services department just issued new guidelines for the visas, making it more difficult for companies to use them to bring foreign tech workers into the U.S.

“We had to raise our hand,” Sandoval said.

The governor toured Silicon Valley in February and said he talked with more than 40 executives from companies including Microsoft Corp. who were “very interested.” The companies declined to comment.

“The interest is absolutely there,” said Bismarck Lepe, founder and chief executive officer of Wizeline Inc., a business applications and software provider. Though it’s based in San Francisco, its main operations are on a Guadalajara campus that has the full Silicon Valley vibe going, with ping-pong and foosball tables and scooters for employees, who get free meals.

Lepe, a former product manager for Google whose Mexican-born parents moved to America as migrant field workers, said he opened the Guadalajara office in 2013 because the U.S. had gotten “way too expensive.” The 182 people on the payroll there--where wages are about three times less--hail from more than 10 countries, including Egypt and France.

Sandoval hasn’t released details about his plan, and it’s unclear just how it would work. “The governor’s openness is headed in the right direction,” said Jesus Palomino, who runs Intel Corp.’s design center in Guadalajara. “The message is excellent, but how to go about it will be a challenge.”

Mexican immigration laws wouldn’t pose obstacles for someone from, say, India who wanted to work in Guadalajara for a company in Seattle, said Krizia Delgado, who studied migration at Oxford University. Other governments have established fast-track visa systems for entrepreneurs. Publicly funded Start-Up Chile gives grants and one-year visas to foreigners who want to develop their projects in the country.

Guadalajara has the chops, said Bernardo Santos, operations manager for Jabil Circuit Inc. there. He said more than a few of the clients he’s hosted from the U.S., Europe and Asia have decided to move to the Jalisco state capital, the second-largest city in Mexico, which is in a broad valley not far from the Sierra Madre Occidental mountains and has a bustling arts scene. “It’s a very attractive city.”

U.S. companies started setting up factories there in 1970, to take advantage of lower labor and other costs and government subsidies for construction licenses and property taxes. Much of the tech activity is still in production, but some, including IBM Corp. and Oracle Corp., have campuses rivaling those up north. Intel’s hub, its largest engineering center in Latin America, covers 25 acres.

As much as 40% of the workforce in the city of 1.5 million is tied to tech, as are 52% of its exports, according to Sandoval’s office. After becoming governor in 2013, he moved to enhance that by creating the state Ministry of Innovation, Science and Technology to oversee the promotion of what he called a “culture around innovation.”

Sandoval will brag about Guadalajara for as long as anyone has time to listen. “We have everything--great universities, golf courses, excellent shows, you name it.” What’s more, the surfing paradise of Sayulita is a four-hour drive west and there’s no shortage of tequila, which has been made for centuries from the agave plants that blanket fields not far from the city limits.

The governor could be onto something, said Gary Burtless, a senior fellow at the Brookings Institution in Washington who researches labor markets. If he can “siphon some of those would-be immigrants from the U.S., that’s great news for Mexico.”

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