90% of U.S. and UK tech firms plan to expand overseas, and 76% of those firms will be in more than three markets by the end of 2024. 50% of these tech firms cite growing revenue as their main motivation for taking on international markets, while 43% are exploring new markets in search of top global talent. However, the road to a successful global expansion often comes with challenges.
The same technology firms with multi-market ambitions share considerable concerns as well. Firms cited recruiting (42%), employee immigration hurdles (40%), and different payroll processes (28%) as top challenges
Velocity Global collaborated with Emerald Technology for a webinar that offers expert insights on these common challenges, as well as solutions to overcome them when expanding overseas.
Couldn’t Join Us for the Webinar? View It in Its Entirety Here.
Why Tech Firms Pursue Global Expansion
Alexandria Warren, Global Director of Customer Success at Velocity Global, kicked off the webinar with an overview of the current state of the global expansion. Mike Jones, Co-founder and CEO of Emerald Technology, then elaborated on firms’ motivations to explore new markets. While international growth is a top priority, 81% of companies also see global expansion as a way to:
- Increase shareholder value: This can be accomplished through an IPO or managed acquisition.
- Nurture innovation and diversity: 54% of firms cite global teams’ creativity as a key driver of innovation.
- Access to top tier talent: Global teams have higher retention rates compared to domestic teams.
- Create resiliency and sustainability: Multiple revenue streams help shield firms from market forces and recessions.
- Take advantage of free trade in new markets.
Just as these firms share global expansion motivations, they also view regions similarly:
- 38% cite Europe as the most-promising region for growth, with 30% seeking top talent from the region.
- 29% cite Asia as a close second for global talent, but only 17% stated that it is their preferred region for growing revenue.
Identifying and Facing Global Expansion Challenges
Warren then noted common expansion challenges that technology firms face. The primary concern, sourcing talent, is particularly palpable in markets with smaller, more competitive talent pools. This can extend the talent identification process, especially when considering cultural factors.
Finding the right talent that provides valuable knowledge and market insight is a long process, which requires internal teams to spend their time vetting talent. If a company has a position vacant for too long, internal resources are wasted, and ROI slows. Similarly, the “war for talent” is also a real concern. Retaining top candidates in any industry is a challenge for employers, but proves especially challenging for companies looking to enter into a new market with one or two employees. Candidates now have more opportunities, and competitive counter-offers are on the rise. Firms looking to hire the best employees for each position should anticipate candidates’ slow replies and competing job offers.
Given these recruiting and retention difficulties, some firms hire foreign independent contractors as a way to offset immigration complications and hiring lags. However, this seemingly simple solution isn’t always a good option. Independent contractor misclassification leads to significant fines, penalties, back-pay, reputational damage—and, in some cases, a forced exit from international markets. Still, employee immigration challenges convince some firms to utilize independent contractors. Companies must address visa application processes and long wait times, contend with political events (i.e., Brexit), and complex local regulations.
To avoid the risks outlined above, many businesses go the route of hiring full-time international employees. Once a company compliantly hires and onboards an employee, it must also consider the different payroll processes. Each market is unique and firms planning a multi-market global expansion face distinct payroll processes in each.
Solve Your Global Expansion Challenges with an Experienced Partner
While Alexandria and Mike detailed firms’ most formidable hurdles, they also provided attendees the tools to tackle these challenges. If you’d like to learn more about how your firm can prepare for and overcome challenges to growing your global team, watch your free webinar, and reach out to Velocity Global and Emerald Technology today.