While this venture promises significant opportunities, it also presents a range of complex challenges, particularly in ensuring compliance with local laws and regulations. Businesses must decide whether to handle this internally or to outsource these affairs to experts. Below we explore the challenges that can arise when managing global expansion internally, and highlight the benefits of outsourcing these critical tasks.

Doing it yourself

When businesses decide to tackle expansion internally, they often appreciate the control it affords. However, this control can become a double-edged sword. Retaining full control over the expansion process can lead to an increase in internal costs and a decrease in operations.

When expanding overseas, setting up fast is key. We typically see high growth companies operating with small teams, making timelines a real challenge. As is often the way, setting up in a new market takes longer than one might expect, especially if you haven’t taken into account everything you need to operate locally. Setting up bank accounts, completing tax registrations, enrolling for payroll can vary in each jurisdiction, and a simple thing like missing or having a delayed tax registration can impact setting up a bank account or payroll.

Another challenge that a lot of businesses face is understanding the differences between the governance and compliance in each country. It’s very easy to become non-compliant with local governance laws, and this can bring your operations to a grinding halt, leading to fines or tying your teams up with local problems that divert them from the day to day operations.

As companies scale and operations get bigger, getting compliance right becomes essential.

To reach the point of global expansion, teams have likely devoted a lot of time and effort to ensuring the success of a business, so it’s understandably hard to entrust the continuation of this success in the hands of an external party. However, no matter the competency of your existing team, the likelihood that they are equipped with the necessary awareness of the business and cultural landscape in new jurisdictions is generally low. To take this next step, it’s important to pause and assess the temptation to retain control against the benefits of engaging experts.

Outsourcing

Outsourcing compliance tasks to experts with both local and global knowledge can offer several compelling advantages. By leveraging the experience and knowledge of advisers who understand the nuances of international expansion, businesses can streamline the setup process, avoid common pitfalls, and achieve faster, smoother market entry.

This specialised guidance helps reduce internal costs associated with establishing local entities and navigating regulatory requirements. Experts can also mitigate risks related to compliance, legal issues, and operational delays, allowing businesses to focus on their core competencies while the expansion process is managed by specialists.

With the streamlined approach outsourcing provides, it can make the financial decision to bring the work in house difficult when trying to hire an individual within the organisation with the necessary global expertise. When selecting an external adviser, it’s important to identify a team that can scale with you as your needs evolve. The value an adviser can add in the initial stages may be look very different a year after you’ve first entered a market, so it’s important to find a provider with the ability to work alongside you at all stages of the process.

In summary

While handling global compliance internally offers certain benefits such as control and direct integration, it comes with significant challenges and risks that can hinder successful international expansion.

The best resource at your disposal is your advisers. By appointing a team who can guide you on each step, from first discussions through to the company being operational and onwards, you’re ensuring the future proofing of your company.

Through access to specialised expertise, you can reduce risks, and allow your businesses to focus on its key strategic objectives, enhancing the prospects of successful international growth.

How ZEDRA can help

By outsourcing the heavy lifting of international expansion to specialist firms like ZEDRA, you can gain access to global expertise, local knowledge, banking networks, and streamlined processes that can navigate these challenges more efficiently. While outsourcing may entail additional costs, it offers the best chance of success in new markets. Working with global experts accelerates international growth and minimises the risks and complexities associated with compliance, ensuring that you can focus on their core operations while confidently expanding into new territories.

For more information on how the team at ZEDRA can support you on your international expansion journey, contact Jemma Williams (https://www.zedra.com/people/jemma-williams/).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. This article originally appeared on ZEDRA's website here: https://www.zedra.com/insights/global-expansion-outsourcing-vs-in-house-expertise/.