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Companies push ahead with global expansion despite uncertainty

The pandemic has caused some firms to slow global expansion plans, but not abandon them, says Ben Wright, CEO of global expansion solutions provider Velocity Global, pointing to a bounce-back in the Asia-Pacific as an indicator of potential recovery in Europe.

Velocity Global’s State of Global Expansion 2020 report, launched just before the outbreak, took a deep dive into the expansion plans of 500 UK-based tech companies and found that three quarters had their sights set on an international move in the near future.

 

Accessing tech skills was one of the top three reasons firms planned to move into new markets.

“That has not changed; the talent is still global and, in many cases, possibly more plentiful due to Covid-related layoffs,” Wright said. “What has changed is a company’s risk tolerance. Safety is now paramount; agility is necessary and businesses need to implement flexible approaches to global expansion that empower them to react quickly.”

His comments coincide with an announcement by global workforce solutions provider Airswift of the appointment of Maxime Degaldi in the newly created role of China country manager as the company expands its presence across Asia to capture the renewables market. Based in Airswift’s Shanghai office, his role will initially focus on the company’s diversification into wind – China has more than 300 wind projects operational or in the pipeline – as well as servicing its existing client base.

Meanwhile, UK tech recruitment company 3ecruit is seeking to establish a German-speaking office in Europe as part of its long-term growth strategy. With the UK accounting for just 10% of its business, the multi-lingual team is focused on the EU together with expanding its share of the global market, having recently securing contracts in Japan, the United States, the Middle East and Australia.

Looking to Asia
Wright pointed to activity in the Asia-Pacific as a sign of things ahead for Europe. “The Asia-Pacific region (APAC) saw the initial impact as the first to face the outbreak of Covid-19,” he said. “During January and February, companies choosing to move forward with expansion in APAC slowed by a third compared to the previous six months. But as parts of the region reportedly moved into an initial recovery in March, the number of companies choosing to expand in APAC more than doubled compared to the first two months of the year.    

    

“That could be an indicator of the recovery to come in Europe. In the first quarter of 2020, more companies sought our global expansion services in Europe than in any other quarter over the past five years.

    

“That interest reinforces the results of the survey of 500 UK tech companies, undertaken a month before the Covid-19 virus took hold in mainland Europe, which found that the continent was the most sought-after destination for global expansion. Almost half (47%) cited Europe as the location that offers them the best opportunity for revenue and profit growth with Asia (22%) and North America (13%) a distant second and third.”    

 

HR challenges

Alongside tackling the issues caused by the pandemic, HR teams must also contend with a range of challenges that international growth poses even in normal circumstances.

 

Recruiting internationally (30%), employee immigration (28%) managing different payroll processes (27%) and finding expert consultancy in international markets (26%) were all among the top six challenges highlighted in the State of Global Expansion 2020 survey – along with communicating across long distances with clients (28%) and incurring tariffs and export fees.

 

There are several paths to global expansion to access top talent around the world, each with its own level of compliance and control, including third-party agreements with contractors and joint ventures.

 

Wright advocated an international Professional Employer Organisation (PEO), sometimes called an Employer of Record service, as a flexible solution. “This approach strikes a balance between retaining control and doing away with the administrative headaches of managing workers overseas,” he said. “An international PEO uses its global network of business units to employ workers on a company’s behalf, relieving administrative headaches such as creating locally compliant contracts and managing payroll. The PEO’s pre-existing recruitment network will complete the process quickly, empowering a business to have a workforce up and running in a new location in a matter of days.

 

This speed and flexibility makes businesses more agile in their approach to global expansion, enabling them to test out new markets without the gamble of establishing a full entity, and potentially withdraw from it just as easily.”

 

To read the Velocity Global report, go to  https://stateofglobalexpansion.com

 

 

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