Beyond Borders: Top Considerations for Global Expansion

Expanding globally and hiring talent from different markets can be a smart move for a business. Global expansion opens doors to new markets, supply chains and, perhaps most importantly, skilled talent pools. However, international business also poses significant challenges that need to be accounted for, including navigating complex legal and regulatory requirements, safeguarding intellectual property rights and adapting to local talent development practices.

In today's increasingly interconnected world, crossing borders is no longer optional but rather a business imperative. This article highlights the top considerations for businesses looking to expand globally and succeed in international markets – despite the obstacles they may face.

Global expansion and hiring can benefit a company at various stages of its business lifecycle, such as:

• Testing existing products and services in a new market 

• Piloting a new product or service in a different market

• Enhancing a cross-border corporate transaction (e.g. M&A, carve-out, IPO)

• Building an interim team in a market abroad (before establishing an entity)

• Tapping into new talent pools (whether for niche skills or to build a more cost-effective team)

The primary goals of global expansion and hiring are to access new markets, supply chains and talent. Ultimately, a global strategy aims to improve business opportunities and achieve the following advantages:

• New revenue potential

• Operational cost reductions

• Increased diversity, equity and inclusion (DEI) 

• Supply chain diversification

• Sustainable growth opportunities

• Talent development, including niche talent and a more cost-effective workforce

Achieving success in global expansion can be challenging, with several potential pitfalls along the way. Here are some of the many obstacles businesses often encounter while conducting international business:

• Burdens of entity establishment

• Risks of permanent establishment

• Global tax liabilities

• Legal and regulatory compliance

• Intellectual property (IP) protection

• Localizing talent development and HR support

In the past, a business typically began operations in its home location and then expanded nationally into other markets within the same country. After achieving success locally and regionally, the company then pursued international expansion to explore new business opportunities and assemble teams abroad.

During the international expansion phase, businesses often establish entities in other countries to access new markets, diversify supply chains and recruit talent. 

However, in today’s fast-paced business climate, this trajectory isn’t always feasible.

“The model for global expansion is rapidly changing,” says GoGlobal Partner Andrew Lindquist. “Thanks to technological advancements and remote work options, global expansion and hiring can now occur at any stage of a company's life. For example, it is not uncommon for a nascent startup to have a cross-border workforce and aim for cross-border business from the outset.”

As Andrew says, “Every day, new opportunities arise for companies to tap into emerging consumer markets and growing talent pools. But, at the same time, so do challenges. That’s why a global strategy is especially important.”

A global expansion and hiring strategy can take many forms, but it is essentially a detailed business plan that outlines how a company will expand its operations into new locations abroad.

Some of the areas your global business expansion and hiring strategy may cover include:

• Specific goals and objectives in expanding globally

• Identification of target countries

• Product development strategies

• Collaboration with international partners

• Risk assessment and mitigation policies

• Overview of labor laws and other HR considerations

Sometimes, a business makes the mistake of trying to embark on global expansion plan without consulting experts who know the “ins and outs” of the target marketplace.

“An experienced team of specialists can provide valuable assistance in overcoming obstacles and steering a company towards success by uncovering fresh prospects overseas,” says GoGlobal Partner Nick Broughton. “However, when assembling your international expansion team, it's important to follow the same principles that sports teams use to create a winning lineup.” 

Here are some of the key players and functions to consider:

Legal: By offering advice on regulatory compliance across various countries, these professionals can protect global business expansion endeavors. The functions they may cover include:

• Protecting the company’s intellectual property (IP)

• Negotiating contracts with international partners

• Overseeing expansion efforts to ensure the process is being conducted in an ethical and lawful manner

Accounting and Finance: These partners can provide valuable insight and guidance on financial matters related to the expansion, such as:

• Assessing the financial feasibility and potential return on investment for entering a marketing

• Identifying and mitigating financial risks

• Developing financial strategies to support the expansion

• Advising tax planning and reporting

IT and Technology: Technology is crucial for companies to operate and compete successfully in the global market. IT professionals can aid your global expansion by implementing technology that reduces expenses and boosts competitiveness. They achieve this by:

• Setting up the necessary technology infrastructure and systems to support your expansion efforts, especially for remote work (e.g. cloud-based solutions, communication platforms and data management systems)

• Securing IP digitally and protecting your company from cybersecurity threats

• Optimizing workflow processes, automating operations and improving efficiency

Marketing and Public Relations: Establishing a favorable reputation in the market is crucial in building a company's brand image overseas and creating a positive perception that can promote business growth in new markets. 

Marketing and reputation management are vital for:

• Creating awareness and interest in your company’s products or services

• Building trust and credibility with key stakeholders (e.g. government authorities, customers, talent pools, vendors, suppliers, etc.)

• Forming partnerships and alliances 

• Attracting and retaining top talent

Human Resources: These experts are key to international expansion because they can help you attract, develop and retain the right people. They keep people at the core of your global expansion.

This is done by:

• Navigating the complex task of administering payroll and managing a headcount in an unfamiliar labor market

• Providing the right support to your workers when it comes to their taxes, statutory benefits, leave time and compensation

• Interfacing with the IT team to align your technology ecosystem supports human capital development

• Developing benefits packages with features like health insurance, retirement plans, equity options and other forms of compensation 

Companies have traditionally relied on three main options for tapping into global talent pools: employer-sponsored visas, setting up a company abroad in the target country or engaging independent contractors. 

However, these "legacy" hiring models have their own set of challenges and risks, such as bureaucratic delays, tax liabilities, compliance hurdles and operational inconveniences that can eventually escalate into significant issues:

• Employer-sponsored visas: There are delays, processes and restrictions that can get in the way of employer-sponsored visas. Sometimes, this option may not be feasible for near-term hiring. For instance, in mid-2022, the United States Citizenship and Immigration Services (USCIS) declared that the country had already met the caps for the H-1B lottery until the end of 2023. 

• Setting up a company abroad: Typically, the process of establishing a local presence is challenging, and once established, the company assumes the risks and obligations of operating and managing an in-country workforce. Additionally, business incorporation in certain countries may take more than six months, as indicated by World Bank data, and the procedure may involve significant initial expenses.

• Engaging independent contractors/freelancers: By engaging independent contractors (ICs) and freelancers, companies risk facing permanent establishment risks and may be subject to misclassification fees, fines and legal consequences.

For some companies, there is a solution to hiring foreign talent quickly and compliantly: through an Employer of Record (EOR). 

An EOR is a business organization that already has legal entities established in the target countries where the hiring company (the EOR's client) wants to hire talent. The EOR legally employs the talent on behalf of the hiring company, assuming the legal liabilities of operating a local business while administering payroll and managing local employees in the country. 

“In order to be successful, an effective EOR brings specialized knowledge in local HR regulations, statutory requirements, customary benefits, culture and hiring practices,” explains Andrew. “With the right expertise, the EOR can ensure international employees are welcomed locally, onboarded efficiently and well-cared for throughout their entire employment tenure.”

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By partnering with an EOR, a company can avoid the lengthy process of business incorporation and quickly hire workers. Onboarding can take place in as little as 24 hours in many cases. 

“The EOR hiring model offers high levels of transparency,” says Nick. “The hiring company pays a predetermined amount to the EOR instead of piecemeal capital requirements, such as setting up a local bank account, paying infrastructure costs, office overhead, registration fees and hiring local consultants.”

The EOR hiring model effectively eliminates barriers to global market entry, enabling companies to access new talent pools worldwide with flexibility and ease. Meanwhile, the worker, referred to as a 'client worker,' is managed by the client company and performs their day-to-day responsibilities like any other team member.

The EOR hiring model, according to Nick, can also offer numerous advantages to client workers, such as regulatory compliance, tax protection, supplemental benefits and local support in their preferred language and time zone.

“When choosing a partner to manage EOR hiring and localized recruitment, it's essential to ensure they have the expertise and capabilities to meet your specific needs,” adds Andrew.

The following table offers recommendations for vetting an EOR service provider. 

When it comes to global expansion and hiring, partnering with an EOR can help strike the right balance between speed and risk, regardless of your company's current stage. 

“If you're venturing into a new market and planning a large investment with many new hires, setting up a legal entity may be necessary – but an EOR can serve as an interim ‘bridge’ solution,” says Nick. “On the other hand, if your focus is on rapid hiring and growth while minimizing costs and liabilities, an EOR might be the ideal choice for the long term.” 

When a company is assured that their business is operating in compliance and without interruption, they can focus on their most critical activities that drive growth. By partnering with a reliable EOR, your fast-growing company can achieve agility, efficiency and peace of mind in global hiring and business expansion.