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Silicon Valley leaders have been locked in a tense standoff with U.S. President Donald Trump over his hard-line stance on immigration, but the tech industry appears to be embracing Mr. Trump's latest efforts at immigration reform.

An executive order dubbed "Buy American, Hire American" that Mr. Trump signed on Tuesday calls for federal agencies to review the H-1B program, which grants 65,000 temporary working visas to immigrants employed in select high-skilled fields such as technology and medicine, and another 20,000 to workers with graduate degrees from universities in the United States.

The future of the program, which awards visas at random in an annual lottery, has been a source of anxiety for Silicon Valley, where roughly two-thirds of science and technology workers are immigrants.

Read more: U.S. visa processing delays heighten allure of Canada's tech sector

Industry leaders have long complained that the onerous U.S. immigration system has hampered their efforts to retain the world's top tech talent and made it difficult for young immigrant entrepreneurs to launch new businesses.

Canadians firms have been closely watching Mr. Trump's immigration agenda, with some U.S. industry analysts fearing restrictions on skilled worker visas may push technology workers north into Canada.

During a campaign stop in Fort St. John, B.C., this week, provincial Liberal Leader Christy Clark said "hire American" rules may be an opportunity for technology firms in Kelowna and Vancouver to attract the brightest minds from the United States. "You can't stop free trade in ideas," she said. "We are going to try to make the most of that opportunity if we can."

Mr. Trump described the order as the first step in a "long overdue reform" of the H-1B program, to combat fraud and abuse with a goal of ultimately replacing the current lottery system with visas reserved only for "the most skilled and highly paid applicants" and which "should never ever be used to replace Americans."

Many in the U.S. tech industry view the move as aimed not at Silicon Valley firms, but at large technology outsourcing and consulting companies such as Infosys Ltd. and Wipro Ltd., several of which are headquartered in India but whose U.S. offices are among the heaviest users of the H-1B program.

A 2016 analysis of U.S immigration data by the Economic Policy Institute, a think tank backed by the labour movement, estimated that global outsourcing firms made up the majority of the top 10 applicants to the program from California., a tech-industry lobby group backed by Facebook chief executive Mark Zuckerberg that advocates for immigration reform, released a statement Tuesday saying it was "hopeful" Mr. Trump's order would lead to improving the U.S. immigration system for high-skilled workers. It called for reforms that would raise the minimum wage to qualify for a visa and treat companies that are "super-dependent" on H-1B visas differently, such as banning their ability hire workers on H-1B visas as independent contractors through temporary staffing firms.

Outsourcing firms have long been a thorn in the side of U.S. tech companies, who say they struggle to compete for a limited number of visas for high-skilled workers against large firms recruiting lower-skilled computer workers for below-market wages.

Smaller startups in particular can typically afford to file only a handful of H-1B applications, usually for workers with very specific skills, says Manan Mehta, founding partner at Unshackled Ventures, a venture-capital firm based in Palo Alto, Calif., that invests primarily in startups run by immigrant entrepreneurs, including helping them navigate the U.S. immigration system.

"Right now, it's effectively who's got more raffle tickets than the others," he says. "It's just a matter of the consulting companies have more raffle tickets because they file more H-1B applications … and as a result, their odds of success are much greater."

However, while U.S. tech companies may approve of modest efforts to reform the H-1B program, many in the industry still fear Washington may go too far.

Information Technology and Innovation Foundation, a research firm backed by the tech industry, warned that other proposals put forth by members of Congress from both parties – such as ending visas for spouses of H-1B visas or requiring companies to prove conclusively that no U.S. workers were qualified for a job – could would harm the tech industry's competitiveness.

"We are talking about fast-moving industries," foundation president Robert D. Atkinson said in a statement. "Companies get opportunities, and they have to jump on them. Delaying them for too long would be bad for innovation, job creation and growth."

In a news briefing ahead of the order Monday night, a White House official called out several global outsourcing companies by name, accusing the firms of flooding the H-1B program with applications and scooping up the "lion's share of the visas."

India's IT outsourcing industry was quick to defend itself against the criticism that it uses the H-1B program to undermine U.S.-based tech firms.

"We believe that the current campaign to discredit our sector is driven by persistent myths, such as the ideas that H-1B visa holders are 'cheap labour' and 'displace American workers' who train their replacements, none of which is accurate," the National Association of Software and Services Companies, an industry group representing India's IT outsourcing industry, said in statement following Mr. Trump's order.

The association warned that moves to restrict H-1B visas to only the highest-paid workers would have "unintended consequences," including favouring Silicon Valley over lower-cost regions of the United States.

Some outsourcing firms have already signalled that they plan to change their U.S. strategies in response to fears of a crackdown on the H-1B program by Washington.

Vishal Sikka, CEO of global IT outsourcing giant Infosys, which has offices across the United States and Canada, told a conference call with analysts this week that the company is focusing on increasing its U.S. hiring and expanding local training and development centres "to mitigate any potential risks from visa regulation in the U.S."

Arguments that the U.S. tech industry is suffering from a shortage of skilled local workers are "preposterous," says Chase Norlin, a Silicon Valley entrepreneur who has called for Washington to reform the H-1B program.

"It's just another distraction mechanism that they're using to avoid discussing the real issue, which is the exploitation of cheap foreign labour," he said.

Mr. Norlin built a successful digital advertising company primarily through hiring and retraining unemployed local workers, mainly because he lacked the venture capital to hire the most coveted employees.

He says he began to rethink his beliefs about the tech industry's reliance on hiring skilled workers from abroad after major tech firms, including Google and Facebook, began to poach his employees.

Today he is CEO of Transmosis, a company that focuses on helping to train U.S. workers for high-skilled science and technology jobs and connects them to local employers, including workers who have been laid off in recent years from U.S. tech giants such Microsoft, Cisco and Hewlett-Packard.

The number of applications to this year's H-1B lottery fell below 200,000 for the first time in five years, the U.S. Citizenship and Immigration Service reported this week, although the program still reached its cap in just five days. That drop in applications could be seen as a worrying sign that Mr. Trump's anti-immigration rhetoric has already put a chill on demand from foreign job applicants, said Russell Hancock, chief executive officer of Joint Venture Silicon Valley, a regional think tank.

"One possible interpretation is that our new President has already made America a less welcoming place and so people feel like they should keep their distance, don't bother," he said. "That's bad news for the tech industry because we have to compete in a war on global talent."