Global Expansion Strategy Do’s and Don’ts for Staffing Agencies and Recruiters (Updated 2021)

If you’re limited in where you can deploy talent, you’re limited in your revenue potential. The world is becoming increasingly connected in business. It’s not surprising that you might be considering a global expansion in the year to come. Remote and hybrid work is quickly becoming the norm, which makes it easier for recruiters, staffing agencies, consultants, and other talent procurement professionals to branch outside their geographic boundaries to find top global talent for their clients.

There are many great reasons to consider a global expansion strategy right now, including advanced technologies, diversification, growing economies, and access to a skilled workforce. Expanding can allow you to test new markets, create regional centers, increase revenue, and stay ahead of the “Great Resignation” by building a global talent pool.

While an expansion into other countries can widen your access to candidates and increase your revenue and client potential, it’s also a risky and complex endeavor that should be carefully considered and planned. Before you jump into your expansion plans, it pays to know some best practices and mistakes to avoid to help ensure you are prepared for the recruiting challenges you’ll need to overcome to build successful operations abroad.

Do: Choose the Right Places to Expand

The success of your global expansion strategy may depend on where you choose to expand. Staffing markets vary across the globe, and some countries are more fruitful expansion locations than others.

For example, in Europe, the top 10 places to expand to include:

1. Ireland
2. Sweden
3. Denmark
4. Finland
5. Switzerland
6. Latvia
7. Lithuania
8. Spain
9. Germany
10. Austria

In the Americas, the top 9 countries to target in your global expansion strategy include:

1. Canada
2. United States
3. Argentina
4. Chile
5. Colombia
6. Mexico
7. Peru
8. Brazil
9. Venezuela

These lists are based on comparative market size, regulations, ease of doing business, economy, long-term growth potential and market competition.

Do: Leverage Existing Relationships

It can be difficult to break into another country. Leverage your existing employee, client, and candidate relationships and request referrals for out-of-country contracts and recommendations to give your global expansion strategy some early momentum.

While you will want to set aside a hefty budget for marketing and advertising in the new market, client and employee referrals are a low-cost way to gain new clients and candidates. What’s more, they’re often more effective considering they are coming from a trusted source — someone who has a positive existing relationship with your business.

Don’t: Expect Your Current Success Factors to Translate Globally

Clients may have unique hiring needs and processes overseas. The candidate pool may be vastly different as well, with unexpected talent shortages and different types of growing and promising industries than you’re used to.

You shouldn’t necessarily think that your success factors in your home country will translate to your global staffing strategies. Research each country and its unique hiring trends, challenges, and opportunities. Create a unique plan for each market.

Don’t: Underestimate the Complexities of International Labor and Payroll Regulations

Every country has its own set of labor laws, payroll regulations, tax regulations, and more. It’s easy for expanding agencies to unintentionally overlook the differences between the regulations between the different countries they work in, which can lead to lawsuits, fines, and other penalties.

Do: Understand What It Takes to Expand and Employ Workers in Another Country

It’s not as simple as reaching out to clients and candidates in another country. While you could target your new market with local staff, this isn’t the best option to expand internationally. You’ll face significant recruiting challenges, such as working in time zones, understanding cultural nuances, getting to know foreign laws and regulations, and facing language and communication barriers.

To expand internationally, a second option you have is to set up a business entity in your country of choice. To set up a foreign entity, you will need to understand:

• Company and employment law
• Staffing agency compliance and regulatory frameworks
• Local HR and payroll obligations
• Local customs and cultural barriers

This process can come with significant costs and take months or even years to complete:

• Entity registration and setup: Minimum $10,000
• Setting up employment contracts/registrations: Between $10,000 and $50,000
• Open foreign bank account: Minimum $5,000
• Contract with foreign payroll provider: Minimum $2,000 per month
• Retail legal and financial advisors: Between $3,000 and $15,000 per occurrence
• Total: Minimum $30,000

However, setting up a foreign entity is the best option at times, specifically when you are ready to commit long term in a country (such as if you’re opening a facility/plant) and plan to hire a large number of employees there. If you have time to wait before hiring employees (3-6 month wait) and have a thorough understanding of culture and employment requirements in the country, it could also be right for you. It’s also a good option if you have the internal resources required to manage the administration of global employees and stay on top of foreign labor laws.

Not sure of your commitment to the country? It’s important to note that there is a cost for dissolving a foreign entity if it doesn’t work out. Depending on a number of factors (the country, the type of operations, the building owned, and the number of employees), this could take anything from a few weeks to several years.

Do: Partner with a Global Employer of Record (EOR)

While you could have local staff target your new market or set up a foreign entity on your own, your best bet may be to partner with an EOR, which has many benefits. Of particular note is the fact that you will be able to use their existing infrastructure in the country, which will significantly reduce the cost and time associated with registering as a business entity. If you choose to use EOR services, you can be present in a new international market without all the hassle of setting up an entity.

This might be the right global expansion strategy for you if you:

• Are testing a market before making a long-term commitment
• Have immediate hiring needs (can’t wait 3-6 months to hire employees)
• Lack critical mass to justify a brick-and-mortar presence and associated expenses
• Lack the internal resources to manage the administration of global employees
• Face complex and/or employee-friendly labor laws in the target country
• Have minimal HR experience in the target country
• Have budget constraints

To use an EOR company, you will need to know:

• Where you want to expand
• Who you want to hire

EOR service providers can make your global expansion easier. There are minimal start-up costs, minimal ongoing fees, and your workers are compliant from day one. What’s more, an EOR will take on the liability of employing workers in another country. You find the clients and the talent they need, and a global EOR can assume the legal responsibility of the workers, ensure regulatory compliance in the country of work, and manage onboarding, payroll, benefits, and workers’ compensation.

People2.0 has the largest global footprint and labor and compliance experts in 40 countries (and growing) to help ensure you employ your distributed workforce compliantly virtually anywhere in the world. Contact us for a quote today.