Mid-size company owners, more often than not, find that international growth is part of their plan to gain a competitive edge in the market, as a result, they need to familiarize themselves with global HR consulting. According to a 2014 report from Deloitte, 35% of firms outsource expat administration management, and 21% of businesses plan to outsource this HR task. Also, 38% of companies surveyed, plan to outsource HR administration duties.
Outsourcing HR is a commonality between small to mid-size firms because it allows them to focus their efforts on strategic tasks. In fact, it’s grown into more than a $150 billion a year industry with more than 85% of companies in the US outsourcing some form of HR responsibility to a consulting firm or independent contractor.
As a result, if you’re expanding overseas you’ll eventually need to secure a solid HR team. Nearly half of mid-size firms make at least 50% of its revenue in international markets after expansion, and when you reach this level, you’ll need a reliable HR team to fall back on to sustain growth. If you don’t use global HR consulting, you may not be prepared for the following risks.
1) Managing Human Capital and the Necessary Requirements
It’s likely that each country you operate in has differing labor laws and requirements. As you grow, managing these responsibilities is an increasingly daunting task. To remain compliant, we suggest outsourcing your payroll administration. Keeping tabs on in-country laws is an enormous responsibility for an in-house team member.
Another benefit of using a global HR consulting team is the ability to outsource hiring and firing responsibilities. In-country recruiting may be a more efficient method to find the best talent. It also puts the unfortunate termination process on your consulting firm. Plus, global experts can create effective international employee contracts and warn you about any labor laws that may affect the hiring and firing process before you run into unnecessary conflicts.
2) Understanding the Native Business Environment
If you didn’t grow up in Tokyo, Japan, chances are you do not fully understand all the traditions and customs in that city. It’s important to know that bowing is the Japanese version of a handshake, and if a bow isn’t returned that is viewed as insulting. When you work with a global HR consulting firm, they can help you learn the customs of your target country. The best part is they can work with your native employees and make their work experience enjoyable. Corporate culture is key – in every country – and an outsourced HR firm can help build a strong one.
3) Valuable Experience and Diversity
Global HR consulting assists with compliance and cultural references, but it also gives you the opportunity to tap into different levels of experience. Consulting firms are specialized in all areas of HR. Hiring these specialties in-house may not be realistic for small to mid-size firms. A global HR consulting company puts everything under one roof. Plus, it allows you to diversify your team and be better prepared for situations that may arise in the future.
Turn to the experts at Velocity Global for your international consulting needs. We work in more than 185 countries and help companies with their global expansion needs including payroll administration, compliance and labor regulations. Contact us today!
We recently co-produced a webinar highlighting the top 4 things every global HR professional should do in 2017, check out the recording here.