International business expansion: Why … and why now?

January 25, 2023

Welcome to Expand or Expire, our new podcast about thriving in the global economy

Why should you pursue international business expansion—and what does it take to be successful? More often than not, there’s a single answer: people. You’re looking to hire the best global talent. Or you need to hire abroad to help you carry out your market entry strategy.

In either case, it’s critical to understand the HR considerations—yes, the people aspect—of global growth to help your organization meet its goals.

In our new podcast, Expand or Expire, we explore what it takes to build, grow and manage a global workforce. We talk with HR thought leaders, employees and experts about labor market trends, global talent, payroll management, the employer of record solution, legal compliance, remote working and more.

In Episode 1, we dive into global hiring. Specifically: Are you expanding internationally to hire? Or hiring to expand?

Expanding to access global talent

Deirdre Mendez, director of the Center for Global Business at the University of Texas’ McCombs School of Business, has studied international hiring extensively, and she notes that there’s been an evolution in why employers are looking abroad for workers.

Mendez says that in the early days of international outsourcing, in the 1970s and 1980s, companies were looking to fill manufacturing and IT roles. Today, however, it’s more about hiring global talent to meet diverse business needs across a wide range of industries.

“Employers are not only looking for low-cost labor,” Mendez notes. “They may actually be looking for someone with specific expertise that they are lacking.”

Hiring as part of a global expansion strategy

For companies wanting to grow their customer base, expanding into new international markets is increasingly the next step. And they need to hire people in those markets to make it happen.

That’s been the case for Utah-based Younique, a direct sales cosmetics company that’s expanded to Australia, New Zealand, Hong Kong, Canada, Mexico, the U.K., Germany, the Netherlands, Austria, Belgium, Spain, Portugal, France and Italy.

Chris Hurst, director of accounting for Younique, says that for his company’s global expansion strategy to be successful, it needed to hire employees in its target markets to meet the local demands.

“When we decided to expand, we really ramped up our foreign teams with hiring people that can translate, people that can market our stuff in that language and culture, and also sales teams,” Hurst says.

“The biggest thing is just understanding the culture themes that work,” he continues. “Where we're located in Utah, in the USA, might not translate perfectly into Germany,” and local teams are “making sure people feel included and supported in those foreign markets.”

What an employer of record is, and why it may be your best bet for expansion

The path from identifying the need to expand internationally to hiring employees in foreign countries used to be winding and uphill—sometimes not even accessible—for a lot of companies. That’s because you can’t just go into a new market and start hiring; a compliant expansion process requires you have to have a legal business entity in the country, and that takes substantial time and money to establish. Not to mention local HR expertise to ensure you’re adhering to the country’s labor laws.

“Traditionally, you’d open up an entity,” explains Bjorn Reynolds, CEO and founder of Safeguard Global, a workforce solutions company. “So I have to find a lawyer that can open up an entity and in Brazil. I then have to go and find bank account, another local lawyer to set up all of my company, policies and procedures to act as my legal representative. I need to find a tax accountant. I need to find a human resources consultant. I need to go and find a payroll company and all of the administrative services needed to run an employee through an entity.”

But that all changed in 2010, when Safeguard Global pioneered the employer of record model that lets organizations hire in foreign countries—compliantly—in a matter of weeks. An employer of record, which already has set up entities in countries around the world, takes on the legal responsibility for hiring workers on behalf of a company.

“Very simply, we enable our customers to put their talent into our entities,” says Bjorn Reynolds, CEO and founder of Safeguard Global. “We manage every aspect of the HR, payroll and compliance on behalf of our end customer for that employee.”

The capability to hire anywhere in the world without an entity changed the game for companies and other organizations looking to expand overseas and hire globally. Now, more and more are growing beyond their home country.

“I think you'd be hard-pressed to find an industry that isn't taking advantage of this at some level,” Mendez, the UT professor, says. “And one of the trends that we're seeing is that smaller and smaller companies are taking advantage” of hiring internationally.

Listen to the episode now  to hear the full story and learn more about the why and how of hiring for international business expansion.

And don’t forget to subscribe to Expand or Expire in your favorite streaming service so you don’t miss out on future episodes:

Some topics we’ll explore this season include the employer of record solution and entity setup in greater detail, handling international crises, international payroll and managing a global remote workforce.

 

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