With the continuous advancements in technology, the incentives for businesses to expand into new global markets are only becoming more desirable and advantageous. However, when going global, companies have to cope with labor regulations in the country they choose to expand into. If a company is unfamiliar with a market, they are vulnerable to compliance issues and legal ramifications. To overcome this challenge, many companies choose to partner with an International PEO (Professional Employer Organization) to help them with international risk mitigation.
International Risk Mitigation: Why it is Important
The employment laws and regulations vary in every country, making international risk mitigation an important matter for companies to address during global expansion. If companies are unable to foresee potential risks or issues that may arise, they may leave themselves vulnerable to costly legal ramifications.
International Risk Mitigation: How it is Done
When trying to manage international risk mitigation, it is important for companies to keep the following in mind:
Do Ample Research
As companies build a strategy for international expansion, they need to perform due diligence to better understand the legal, political, and cultural implications that may affect how their company operates in a country. The more a company knows about a market beforehand, then they are in a better position to avoid risks and meet the unique requirements of each market. Using an International PEO solution with robust in-country capabilities enables companies to meet the ever-evolving compliance standards and mitigate global risk during expansion.
Practice Global Mobility
Millennials are maturing and becoming key players in the workplace, putting more emphasis on the benefits of global mobility. As this practice grows in popularity, more and more companies are discovering the benefits of a global workforce. These benefits include exposure to new business opportunities in foreign markets, increased employee talent pool, and ability to grow their global footprint. When trying to achieve global mobility, using a flexible, trustworthy, and efficient International PEO solution will allow a company to hire mobile employees, knowing their practices meet all local compliance standards.
Have an Entrance and Exit Plan
The best global expansion strategies are those that incorporate an effective plan for entering a new market, as well as a plan to compliantly exit a country if needed. If a company plans to enter a market by setting up a foreign subsidiary, then they need to be aware of the time and costs needed to not only enter a market, but also the costs and requirements needed to exit a market compliantly. On average, companies can expect the cost and time needed to expand into a market to increase by a factor of three when trying to exit the country. When it comes to entry and exit plans, an International PEO can help companies get into markets quickly, efficiently and compliantly because it does not require them to set up an entity right away. This enables companies to forego maintenance costs, onboard candidates quickly, and keep global operations streamlined. Moreover, this solution makes it easier for companies to exit a market if needed since there is no entity to tear down. If a company does eventually want to set up an entity, International PEO can act as a transitional bridge solution to help them transition employees once the entity is set up.
Duty of Care
It is important for companies to meet all Duty of Care obligations in foreign markets. As an employer, a company is obligated to make sure all employees have a safe working environment and are receiving the appropriate benefits. Utilizing a reputable International PEO service can ensure that the necessary HR processes are in place in order to help keep employees happy and allow the business to operate compliantly overseas. Additionally, this employment method informs employers of any supplemental benefits their employees may expect or require in a country.
International Risk Mitigation: Choosing the Right Partner
Companies should always do their due diligence to make sure they choose a global employment service provider that fits their international growth needs. When going global, companies need to identify their long-term goals and select global expansion partners based on how that partner will help them achieve those goals. For instance, if a company plans to create a large global footprint and expands into multiple markets, they need to choose a partner with expertise handling challenges in all of the countries they hope to operate in.
Being aware of the obligations and risks as an employer is crucial to a company’s overall success and financial security in a foreign country. Businesses can benefit from the expertise available when utilizing an International PEO to help them get into new foreign markets and maintain compliant operations. This Employer of Record solution handles HR functions payroll, benefits, compliance, and employee onboarding in order to help companies achieve their global growth goals. International PEO was designed to manage international risk mitigation, so companies can remain focused on driving their business forward.
Discover the benefits of partnering with the right International PEO provider. Reach out to the experts at Velocity Global to learn what makes our solution the right one to help you accomplish your global growth goals in over 185 countries.