The global economy maintained a resilient stance as 2023 drew to a close, according to the International Monetary Fund, despite enduring geopolitical tensions and inflationary pressures. While some major economies, like the United States, have steered clear of recession and glimpsed potential growth in real disposable income, the overall economic landscape remains complex.
As companies contemplate global business expansion in 2024, they face a critical juncture. Amid this landscape of possibilities, a mix of challenges, uncertainties and opportunities persist. This blog post explores the top 10 considerations for companies venturing across borders for new business and hiring opportunities.
1. The race for talent is back on, and the course is global
The global demand for specialized tech roles like Senior Software Engineers, DevOps Engineers, Cloud Engineers and AI experts remains exceptionally high. This surge is largely driven by the rapid digitization of businesses and the need for innovation in AI, cybersecurity and other tech-driven sectors.
Companies are widening their talent search, seeking regions with niche talent or competitive salaries. The emphasis is on blending local knowledge with specific skill sets fundamental for driving innovation and staying competitive in the startup tech space.
As businesses expand globally, there’s a growing need for niche talent with cultural understanding and familiarity with local business practices. To maintain a competitive advantage, companies will have to adjust how they recruit and hire for key roles.
2. M&A deals are set to surge
A highly anticipated surge in merger and acquisition (M&A) activities in 2024 is set to reshape the corporate terrain, marked by an expected “burst” of long-awaited deals according to a statement from Goldman Sachs. Nasdaq’s recent forecast further reinforces this optimism, painting a promising picture for M&A endeavors despite economic uncertainties and geopolitical challenges.
Cross-border M&As present several advantages for companies:
- Immediate market access for broader customer outreach
- Introduction of new revenue sources through business consolidation
- Competitive edge through the elimination of rivals
- Strengthening supply chains and mitigating operational risks
- Cost efficiencies and expanded operational scope
- Access to diverse talent pools and improved profitability
Navigating cross-border M&As demands meticulous planning, cultural alignment, risk mitigation and regulatory compliance. Companies must prioritize robust talent management strategies aligned with long-term business objectives to leverage the promising 2024 M&A landscape for global expansion.
3. Companies are making big moves to emerging regions
International companies are anticipated to make significant strides towards emerging economies, including those in Africa, Asia Pacific, Middle East and North Africa (MENA) and Latin America (LATAM). In doing so, companies must consider several points:
- Understanding local market dynamics, regulations and compliance standards
- Adapting business approaches to cultural nuances and preferences
- Tailoring marketing campaigns to resonate with target audience values
- Establishing efficient supply chains and logistics networks
- Forming partnerships with local businesses for market insights
- Anticipating and managing risks in fluctuating market environments
- Recruiting local talent and fostering cultural understanding
- Embracing sustainability and aligning with corporate social responsibility (CSR) expectations
- Implementing technology suitable for local infrastructures
- Developing comprehensive, long-term strategies for sustained success
By addressing these key areas, companies can effectively navigate complexities and leverage the immense potential of emerging markets.
4. Customized benefits packages are challenging but vital
As companies extend their operations globally, tailoring comprehensive benefit packages is not just an option but a strategic imperative. It’s an essential step towards attracting and retaining top talent while navigating the complexities of various regions’ compliance regulations and cultural expectations. This trend demands careful consideration due to its direct impact on talent acquisition, retention, compliance adherence and the overall success of companies entering new markets.
Implementing global benefit packages is a major challenge. Neglecting local regulations and cultural expectations can result in fines, unexpected costs and talent retention issues. For example, equity compensation, a key for talent retention, poses intricate legal and tax challenges across diverse global teams.
Balancing uniform benefits with regional needs is crucial for companies managing a global workforce. Failure impacts employee morale and undermines the creation of a cohesive corporate culture and effective talent strategy.
5. DEIB is the norm and companies need to do more
Diversity, equity, inclusion and belonging (DEIB), once seen as mere corporate checkboxes, has now become integral to driving innovation and sustainable growth in expanding businesses. Diverse teams foster innovation by bringing together varied backgrounds, cultures and perspectives, sparking creativity vital in today’s competitive business world.
In 2024, the focus on ‘belonging’ within DEIB is set to intensify. Merely having employees present isn’t enough. They need to feel essential. This sense of belonging boosts engagement, productivity and loyalty. More companies are expected to integrate DEIB into their core strategies, recognizing its role in sustainable growth.
DEIB emphasizes creating environments where diverse backgrounds are valued, respected and empowered. Fostering genuine inclusion cultivates a collaborative work culture, enhancing creativity, problem-solving, employee satisfaction and organizational success.
6. Regulatory compliance is becoming more tangled and complex
The international business landscape faces an intricate web of evolving HR laws and regulations. From shifts in leave policies to changing parameters for benefits, bonus compensation, taxation, investment incentives, paid holidays and employment-related contributions, companies expanding internationally encounter a labyrinth of compliance challenges and corporate risks. These developments necessitate localized expertise and a proactive approach to remain compliant across various jurisdictions.
Niche, localized expertise is pivotal to interpreting and applying the evolving HR laws in each country of operation. Engaging specialists versed in regional HR regulations is essential. They can provide vital guidance, assert legal compliance, implement risk mitigation and design tailored HR strategies to safeguard company operations and brand reputation.
7. Data protection is more essential than ever before
Recent headlines have documented a notable uptick in cybersecurity threats, notably incidents where employers mishandle employee data. This alarming trend signals a heightened risk environment affecting businesses of all sizes, spanning from startups to established industry giants like Tesla.
In response to this evolving landscape, regulatory frameworks for data protection, such as the European Union’s General Data Protection Regulation (GDPR), are expected to become more prevalent and sophisticated. While these frameworks offer further guidance on data security, they also exert added pressure on companies to ensure compliance with stringent standards.
This escalating scenario underscores the imperative for businesses, regardless of their scale, to fortify their defense mechanisms against cyber threats and proactively fortify strategies for safeguarding sensitive employee information.
8. Employer-sponsored visa woes make global hiring more appealing
Due to extended wait times and bureaucratic hurdles, employer-sponsored visas are becoming even more unattractive for companies. For instance, securing an H1B1 visa appointment in the US averages a 500-day wait. That’s just for an appointment.
Employer-sponsored hiring involves intricate challenges, including restrictions on hiring talent from abroad, often limited to specific sectors. Employers must usually demonstrate their inability to find necessary skills within the local workforce, intensifying the hiring complexities.
Prospective employees face hurdles and administrative procedures, from a pre-arrival checklist to managing extensive documentation post-arrival, amplifying the visa challenges. These complex administrative procedures highlight the challenges of employer-sponsored visas, compelling companies and employees to pursue global expansion and hiring with vigor.
9. Companies will have to change how they engage independent contractors
Independent contractors (ICs), who are self-employed professionals serving external clients or businesses, represent a substantial segment of the growing global workforce. World Bank data indicates approximately 1.57 billion individuals, constituting nearly 46.7% of the total workforce, fall under this category.
Several high-profile news stories in 2023 shed light on the perils associated with misclassifying workers, emphasizing the difficulties companies encounter when navigating the intricacies of independent contracting. Despite the flexibility and specialized skills that this trend offers, misclassification poses legal risks. The trend toward ICs is prompting governments to crack down on violators.
The surge in the adoption of independent contracting is propelled by its inherent flexibility and the specialized expertise it brings to companies, providing an agile workforce without necessitating long-term commitments. However, this trend introduces complexities and legal intricacies, demanding careful consideration, particularly as businesses expand globally.
10. Remote work is here to stay but it’s becoming more complicated and companies are struggling to adapt
Among the many changes to the world of work in recent years, remote work models stand out as the most disruptive. This transformation has made remote and hybrid work integral aspects of modern business operations. However, many companies struggle to adapt to these changes, resulting in legal complexities and increased risks that may affect worker satisfaction and engagement. Nevertheless, businesses that embrace and effectively manage these new work models stand to gain a competitive edge.
Worldwide, nations are integrating remote work into their labor laws, aiming to provide worker protections and establish suitable tax structures. Poland’s recent implementation of a new regulatory framework serves as an example. As more countries align regulations to accommodate remote work, global companies must adjust their strategies to effectively engage and support remote workers.
Moreover, companies with remote workforces need to be mindful of protecting technology equipment, data and intellectual property (IP). It’s also important to know precisely the locations of remote workers, including digital nomads. Failure to track their whereabouts can lead to taxation issues, legal risks, audits and permanent establishment. These oversights can adversely impact both workers and companies.
Catalyst for Global Expansion: Unveiling the Role of EOR Hiring
Navigating the complexities of global expansion demands astute strategies and adept maneuvering. Amidst these considerations, the Employer of Record (EOR) hiring model shines as a potential boon for companies seeking to address these challenges.
An effective EOR partner can offer various services, including recruitment support, comprehensive benefits design, adeptness in regulatory compliance, specialized expertise, local know-how and even assistance with managing independent contractors.
An upcoming blog post will explore how collaborating with an EOR service provider can mitigate risks and maximize opportunities in global expansion and hiring endeavors. We will revisit these considerations and scrutinize how such partnerships can offer comprehensive solutions, leveraging their expertise to navigate the intricacies of international business.
Stay tuned as we delve into these essential aspects, shedding light on the pivotal role of EOR providers in facilitating seamless global expansion strategies.
Check out our ‘Pathways to International Success’ guidebook or contact us to learn more about best practices for global expansion in 2024.