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Five Challenges of Global Business Expansion and How to Overcome Them

To meet your business goals, you have to have the right people—period. That’s why the benefits of hiring international talent have become increasingly apparent in recent years. Hiring globally expands your talent pool amid shortages, helps attract and retain top performers in highly competitive markets, reduces business overhead, improves workforce diversity, and even increases productivity and employee engagement.

Despite these benefits, expanding your workforce across borders can be challenging—but not impossible. And it may be the key to your company’s future success.

Below we share the five main challenges for expanding your business globally—and, more importantly, how to overcome them.

1. Hiring

When hiring talent in the past, most companies had to do their best to find people with the right expertise close enough to commute to work. Alternatively, if the talent they wanted to hire lived in another region, companies could try to convince them to move to their local area—but moving is expensive, time-consuming, and requires uprooting one’s entire life, which is a tall ask. Remote hiring created a beneficial alternative.

Now that more businesses are wanting to enjoy the benefits of hiring remote employees in other countries, they are discovering the unique challenges of global expansion.

When opening up your talent pool, you must find ways to stand out in an even bigger market while retaining the talent you already have. Talent expectations may also vary from country to country, as do the finer points of workplace culture and etiquette.

But the main challenge of hiring internationally is a question we answer all the time: "How do you actually do it?"

In the past, hiring across borders was generally restricted to countries where businesses had already established a legal presence, but fortunately, more options are available now.

How to Hire Talent Globally

Establish a New Entity

Entity establishment is ideal for companies with large budgets committed to having a long-term presence in a region. Having a local, legal base of operations is a good way to stay compliant with local laws and regulations. That said, setting up a new entity is a long, tedious, and expensive process—it's not ideal for businesses that are testing the waters of new markets.

Work With Contractors

Working with contractors gives you greater flexibility when hiring across borders than through entity establishment and with fewer long-term commitments for your organization. However, to create the contracts necessary to go this route, you’ll need expertise in the contractor’s local market to classify them appropriately—failing to do so can lead to misclassification fines, penalties, and reputational damage.

Partner With a Global Hiring Expert

A quick and easy way to start hiring globally is partnering with a hiring expert, such as an employer of record (EOR). An EOR is a third-party entity that supports businesses throughout the entire international hiring process. It allows you to cater your expansion strategy to your needs, whether hiring a single employee or building a team across multiple countries.

2. Compliance

Once you’ve found the talent you need to help your business meet its goals, the next question we usually hear is: "How do you pay a foreign employee?"

Understanding how to compliantly facilitate benefits, payroll, and taxes for international employees is often a roadblock for businesses wanting to expand. When building a workforce across borders, you must follow the laws and regulations of your country and those of the region where your talent is based, in addition to international trade rules—which are constantly changing. This makes navigating compliance without extensive local knowledge risky.

Man with pen in hand, looking at laptop

How to Expand Business to Another Country Compliantly

Identify and Understand All Pertinent Laws and Regulations

If you can’t work with a partner, it’s important to take stock of all international and local rules that pertain to your company and the talent you want to hire. Learn the best practices for hiring in the region or regions you want to hire and make sure you understand them. This can take some time, especially if there are language barriers.

Review Your Current Business Practices

Before hiring talent in a new market, it’s wise to do some housekeeping within your organization to ensure you have the resources to stay compliant in the regions you operate. Create a plan to address any holes in your compliance capabilities or potential roadblocks.

Implement a New Process

Once you have a plan of action, start putting it into place. This may include onboarding new HR experts, training staff on local and international compliance expectations, and foreshadowing upcoming changes to the company.

Stay Abreast of Changing Laws and Regulations

Global rules and regulations are always changing, and it’s on you to get ahead of those changes—which is a full-time job on its own. One way you can do this is by compiling a list of resources you can regularly check, such as government publications or private-sector HR websites.

Partner With a Global Compliance Expert

Working with a third-party compliance expert is the easiest way to access the expertise you need to stay on top of international laws for equal-opportunity hiring, taxes, financial reporting, and other legal pitfalls.

3. Payroll

Figuring out payroll for foreign employees is more than understanding exchange rates between currencies. You must also be mindful of the variances in laws and regulations, such as KYC/AML rules, for different countries and your own.

Other markets will also have varying reporting requirements and expectations about contributions to retirement funds, employment insurance, benefits administration, and so on. If you’re not careful, you risk penalties related to permanent establishment rules, employee and contractor misclassification, and even cybersecurity and data risks.

How to Avoid Global Payroll Risks

Do Your Research

Read up on the differences in payroll rules for the country or countries you want to hire in. Make sure you can pay your people compliantly, on time, and without costly penalties.

Partner With Experts

Facilitating smooth and timely pay for global talent requires expertise to ensure you stay compliant and follow the right processes. The thing is, it’s nearly impossible to be an expert in the laws and regulations of every region in the world. Consider hiring in-house experts or working with a third-party HR partner like an EOR.

Business man smiling and talking on the phone

4. Onboarding

You’ve found the perfect candidate, negotiated a contract, and made an offer, which they have accepted. Now it’s time to onboard your new talent.

Virtual onboarding presents a unique set of challenges. You’re probably familiar with the required documentation and standard processes for onboarding in your own country, but what about theirs?

Previously, new hires learned about their roles, company, and culture through face-to-face interactions with managers and coworkers—but with the rise of remote work, businesses need to be more proactive.

How to Onboard Global Talent

Preboarding

A worker’s first few weeks on the job are critical. A strong employee onboarding process can improve retention by 82% and increase productivity by 70%.

Introduce them to their new colleagues, and make yourself available for frequent communication. Encourage your team to reach out and speak with them personally, ensuring they feel welcome from day one.

Arrange for your new talent to shadow fellow team members and include them in meetings with stakeholders or clients. Also, use this time to learn about them—find out how they prefer to work and if they need any accommodations.

Mentorship

Giving your new talent a mentor helps them feel less intimidated by new team members and a new working environment—and in the case of virtual hiring, it helps them feel less isolated.

Training

Without the ability to walk over to a colleague’s desk, it’s harder for new hires to get quick answers to questions about your company’s culture, workflow, clients, and operations. Ensure your training materials are current and that any essential documents for your organization are easy to find and accessible to people with varying needs.

Professionals talking to each other

5. Agility

Global business expansion gives you greater reach and significant advantages over your competitors—like enabling you to respond more quickly across time zones. It also helps make your workforce more diverse.

However, it can often be a time-consuming business strategy, particularly if you're trying to set up an entity in a new country. Focusing on the logistics of maintaining foreign entities and staying up to date with current labor laws and requirements and the cultural expectations of your new talent may come at the cost of agility. This hampers your ability to quickly adapt to shifting economic conditions, pursue opportunities, and change strategies.

How to Hire Globally While Staying Agile

New entities take a long time to set up and take down, making them risky investments. Fortunately, entity establishment isn’t the only way to hire internationally.

Working with an EOR allows you to quickly hire, onboard, and pay distributed talent, allowing you to focus your time where needed. An EOR enables you to nimbly hire the people you need to test new markets, adjust swiftly to market changes, and pursue opportunities worldwide.

For a more in-depth look at how to overcome global workforce challenges, download our guide, Rise Above Economic Uncertainty: How Global Hiring Strengthens Companies Through Uncertainty and Beyond

Working With the Right Partner Changes Everything

Today’s business challenges can be met by opening yourself up to global hiring. Expanding your workforce across borders is often seen as a complicated process, but it doesn't have to be.

Velocity Global makes it simple to overcome the myriad obstacles of global hiring. Through our EOR solution, we provide you with:

  • Local, in-country experts that can help you navigate compliance, payroll, and other challenges to global hiring in over 185 countries
  • Streamlined hiring, onboarding, and payroll management—all in one easy-to-use platform
  • 24/7 ongoing support to grow your team with top talent, wherever they are

Start Building Your Global Workforce Today

You have the confidence, the smarts, and the vision to seize business opportunities around the world—now, get what you need to follow that vision without limits.

Contact us today to learn how we can help you build your global workforce.

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