As more companies expand overseas, global expansion is no longer an option—it is a necessity. Global expansion is an essential strategy to distinguish your organization from the competition and grow revenue, no matter how successful you are in your domestic market.
In fact, 90% of U.S. and UK tech firms desire an overseas presence. According to The State of Global Expansion 2019 Report: Technology Industry, 76% of these firms will operate in three or more international markets by the end of 2024, better positioning them to outperform their competition and create global brand recognition.
The benefits of global expansion extend beyond outpacing your competition. Businesses will also:
- Establish new revenue streams
- Gain access to new talent pools
- Capitalize on available government incentives
- Improve their new global market perception
These benefits prove to new customers that your firm meets their wants and needs, as well as adapts to the market’s cultural nuances. Organizations must first determine if global expansion is the right choice to achieve their growth objectives.
Benefit #1: Establish New Revenue Streams
If your business performs well domestically, expanding overseas to grow your revenue stream may not seem like the first choice. However, a global expansion strategy does not completely mirror a domestic strategy. By evaluating new markets, you identify opportunities to mold portions of your domestic plans to fit within your new international location, ultimately developing a global expansion strategy.
Whatever form your expansion strategy takes, it must explicitly address how it serves the new market’s wants and needs. Developing new revenue streams in the Netherlands requires different preparation and execution than in Singapore. Global expansion fills gaps that many businesses are unable to fill in their local markets. However, your business must act quickly so that the right expansion opportunities do not slip away—or other companies pursue them first.
Benefit #2: Gain a Competitive Edge
Expanding in the global marketplace is essential to escape local market plateaus and outpace the competition. Expanding overseas means you:
- Gain greater exposure for your company
- Earn the trust of new customers
- Capitalize on new market opportunities that are unavailable domestically
- Establish the foundation for a long-term global presence
Domestic success sets you apart from your competition, and global expansion only widens that gap. Quickly establishing a presence in a global market enables you to develop relationships with potential and new consumers. When a competitor moves into the new foreign market after your firm, you have the advantage of brand recognition, earlier access to talent pools, and an expanded customer base. No matter when you expand overseas, breaking into new international markets is a proven method to distinguish your firm from others in your space.
Benefit #3: Access a Unique Talent Pool
Premier talent is essential to any successful global expansion—but it is hard to come by. Many companies face difficulties hiring top talent in their domestic markets and rely on overseas markets to fill these gaps. In fact, 45% of U.S. tech firms say that access to talent is their primary motivation behind global expansion. Local talent can help:
- Make sense of cultural nuances
- Provide insight into new, foreign perspectives
- Navigate language barriers
New markets open the door to top-tier talent, helping companies drive growth, deliver products and services, and understand the local landscape.
Benefit #4: Improve New Customers’ Perception
Global expansion enables businesses to grow audiences and establish credibility—essential steps to become a respected global leader. It is a solid opportunity to market your firm as an international brand, not just a successful domestic player. Firms must do the following to successfully drive revenue in foreign markets:
- Understand their target market’s wants, needs, and nuances
- Develop a marketing strategy that communicates the brand and value you bring to new customers
- Adapt to abrupt market and cultural shifts
Building a global presence means giving customers more accessibility to your offerings and reason to trust your company. If potential customers see that you operate in multiple markets, they see an established company dedicated to providing products or services in diverse markets.
Benefit #5: Take Advantage of Government Incentives
Many governments around the globe provide incentives to attract foreign businesses to their market, which improves the local economy. For some U.S.-based companies, the 35% corporate tax rate in the U.S. is enough to inspire global expansion curiosity.
In Malaysia, for example—one of the top markets for expanding tech firms—the corporate income tax rate hovers around 27%. Local companies pay approximately 19% after deductions, but multinational firms pay close to 17%—roughly half of what organizations based in the U.S. pay.
Incentives are not limited to tax breaks. Other benefits include:
- Low-interest grants and loans for private companies
- Free-trade zones
- Subsidized infrastructure development
- Regulatory concessions
Learn How to Capitalize on Global Expansion with an Experienced Partner
The benefits of global expansion are well within your company’s reach. But making a move is daunting, which is why firms rely on partners to help them understand the complexities of international expansion.
Through our global Employer of Record solution that serves 185 countries and counting, Velocity Global assists businesses with each step of the expansion process, from creating country reports for market familiarization before entry to ensuring compliant employment contracts.
Want to learn more about how an Employer of Record changes the way companies expand overseas? Download your Ultimate Guide to Global Expansion eBook, or reach out to our team of experts today.