By the end of Q3 2019, Netflix had 158.3 million paying subscribers worldwide, about 62 percent of whom lived outside the US. After expanding into Amsterdam, Paris, Sydney, and Berlin over the last year, the company now has 19 office locations across 14 countries. Meanwhile, Spotify has successfully optimized local music preferences and personalized features to reach 159 million active users in 61 countries (and counting).
As these examples show, breaking into a new country is possible — but in order to capitalize on the benefits, it’s wise to seek a team of experts who can help bridge any knowledge gaps along the way.
What a Global Employer of Record Can Do
Any business launching operations in a new country will inevitably face complex legal, HR, and compliance challenges in doing so. According to a survey conducted by my company, Globalization Partners, CFOs at organizations actively planning to expand abroad see regulatory/legal compliance (cited by 56 percent of respondents), tax structure (46 percent), and human capital/talent (38 percent) as the largest potential barriers to success.
From dealing with international tax and accounting regulations to navigating new labor standards, expanding into a new market can be daunting for even the most experienced executives. On top of this, it’s getting harder to recruit top local talent in new countries due to the expansion of competitive remote work benefits.
To succeed in unfamiliar parts of the world, an organization must be well equipped to manage the challenges associated with entering a foreign market. Just like one might seek the help of a real estate agent when purchasing their first home, many savvy companies are seeking third-party experts to aid in their international expansions.
Such partners are well versed in the specific details surrounding employment, tax, and accounting regulations in the countries and regions in which they operate. Often referred to as “global employers of record,” these experts can offer a wide range of benefits to companies expanding internationally, including the ability to hire employees quickly and a well-established legal infrastructure.
Any business looking to break into a new international region might consider working with a global employer of record to:
1. Protect Business and Maintain Compliance With Local Laws
Just keeping up with the laws and regulations in your business’s country of origin can be a full-time job, let alone maintaining compliance in a brand new country. A global employer of record can offer well-established legal capabilities and experience with local laws to facilitate a smoother expansion and help your company avoid costly fines. An employer of record can handle complexities on an ongoing basis, allowing business leaders to focus on expansion rather than getting bogged down with rigorous compliance mandates.
2. Easily Create a Global Team
Businesses are often deterred from hiring remote global teams due to resource requirements. An employer of record can take on the burden of legal, tax, and financial compliance, freeing up time for the organization to acquire the best talent for its teams.
3. Improve the Employee Experience Among New Hires
Leaders should never underestimate the importance of engaging potential employees amid a global expansion. As any successful businessperson will tell you, the key to success lies in an organization’s people. Acquiring talent that aligns with your business’s mission and values should be a top priority.
When a company is burdened with figuring out things like payroll and benefits, it has less time and manpower to dedicate to strategically promoting the business to potential employees. An employer of record can put together a complete benefits package, consistent with local norms and regulations, as well as handle onboarding. That frees the organization’s HR and recruiting teams up to focus on those all-important engagement initiatives.
Finding a Suitable Employer of Record
Setting up and managing an international workforce requires a lot of background research and is a massive time investment for a business. An employer of record can make the process a lot easier — but only if you find the right partner.
Try asking potential employers of record the following three questions. If an employer of record can answer “yes” to all three, it is most likely to make for a great partner.
1. Does your employer of record operate its own entities rather than relying on third parties?
Using in-house subsidiaries and entities rather than relying on subcontractors gives an employer of record more control over service quality and legal contract terms with a global workforce. Such an arrangement also offers assurance that local entities are being maintained according to the standards required.
2. Does your employer of record have an in-country HR team?
Employers of record tend to be most effective when they have locally based teams who speak the language and can help employees with any questions or challenges that may arise in their location.
3. Does your employer of record provide transparency on pricing and cost?
Put simply, this information is critical for any organization to get a full understanding of what it will require to operate internationally.
In business and in life, having a partner by your side through a challenging experience can make things feel more manageable.
Global expansion is one of the most challenging experiences a business leader can face, which is why finding the right global employer of record can be so important. It’s much easier to make critical hiring decisions, meet compliance standards, and manage a successful global team when you have a partner who can help you handle the inevitable bumps in the road.
Nicole Sahin is CEO and founder of Globalization Partners.