Expanding Internationally in 2021
Trending Countries, Pandemic
Considerations, and More

The global business landscape has changed substantially over the past year, but expansion has not stopped. Despite the challenges posed by the pandemic, companies have continued to forge ahead and pursue ventures into international markets. Yet, what does expansion look like today, and what aspects must growing businesses keep in mind as they work to establish themselves globally. Our panel of experts will delve into these issues and provide insights on the top expansion destinations in 2021.

Webinar Transcription

Bruce: Good morning or good afternoon, everyone. My name is Bruce Lynn. I am one of the Managing Partners of the Financial Executives Consulting Group. Thank you for joining our webinar today – Expanding Internationally in 2021. We have a variety of panelists on the line. We have Adam Sheffield from Global Upside, and we also have Srinath Keshavan and Tony Ahern, also from FENG Financial Executives Networking Group, on the line.

Tony is in Dublin and Srinath is in Singapore. So, for those of you who care, it is one o’clock in the morning in Singapore. So, we do want to move this along smartly, so everybody can get to bed.

With that, let us go to the next slide.

Bruce: And again, just a little bit about myself, I am not going to read this here, but you can see this on the slides. I will be the moderator for today’s session.

Let us go to the next slide, please.

 Bruce: And here you see the individuals who will be part of our panel today. They will introduce themselves briefly as we get into the main body of the presentation. And again, if you want to send your comments directly to them, there will be email addresses at the end of the presentation. So let us get started now. Let us go to the next slide, please.

Bruce: And again, for those of you who have been on another planet, there has been a pandemic for the last year or so. And needless to say, economic conditions have been less than perfect for global trade, for global business. But hopefully, we are emerging out the other side, the light at the end of the tunnel is not a train but it is a way out. But the question then becomes where are we going? It might be helpful to talk about that in terms of where we are today and that is the reason why we have our panelists, literally in different parts of the world, to give you their ideas about what is happening in the United States, in Europe, and the Asia Pacific countries. So why do not we just start with sort of, we will go east around the world here. And so maybe Tony, can you just give us a feeling of where we stand today and the impact of the pandemic?

Tony: Yes, sure Bruce, I would be happy to do so.

Hi everybody, greetings from Ireland. So, I am based here in Dublin, in Ireland. And, like pretty much everyone else, pandemic-wise most countries in Europe have been in some form of lockdown for the past year. And we did have a let-up last summer, summer of 2020. But after the new year in January, we are back into a lockdown again, in Ireland, UK, and pretty much most countries in Europe. So, what that means is people who can work from home are encouraged to work from home by their governments. Non-essential retail and hospitality businesses are pretty much kind of shuttered and closed down right now. So yes, it has not been fun as Bruce alluded to, but we are hopeful in the next three to four months, as vaccines start to roll out and the country opens up, Ireland opens up. The UK is doing a really good job with the vaccine rollout. So, the next three to four months as the vaccine rolls out and virus numbers reduce, that Business and Commerce opens up again, and tourism opens up again, which has been kind of badly hit. So that is in a nutshell from Europe, Bruce.

Bruce: Thank you. And Srinath, in the Far East what sort of impact, let us say in Singapore, for example.

Srinath: Thank you, Bruce. To say the least, it has been a very strange year, 2020 has been very strange. It is clearly a year that no one anticipated and strange things have happened. I was talking to my friends in the grain trade the other day, and they have had their best year ever. Stock markets are booming, copper is trending upwards. And that is part of the good news, at least for some. Now the other hand, you have got businesses collapsing, particularly the smaller ones, resulting in people becoming unemployed, suddenly unemployed. So, it is very strange in terms of the impact. I think one of the outcomes is going to be the inequality that exists in society, income-wise, is going to be accentuated going into 2021. And that, of course, leads us with serious social problems.

As far as the spread of COVID is concerned. Yes, Asia has had its serious bouts of it. Most of the countries in East Asia have seen to manage it reasonably well, largely because the whole community has come behind simple things like wearing masks and washing hands, and social distancing. So there has been no debate about it and that has helped. So, it is something that we would never have anticipated in any of the ways that I just mentioned earlier with the contrast that we have, so a stranger all around.

Bruce: Adam, what are your thoughts on maybe its impact on other regions of the world or even in the US?

Adam: Sure. So first of all, hi, from Salt Lake City, Utah. I am here in the United States and just a little bit about the United States that we are hearing, as you know, the vaccine rollouts are moving along, which is great news, each state is different, though, right? There are challenges in each state. So, if you have employees in California, it is different than if you have them in Texas. Texas just announced that no masks are coming off, right. So, everyone has kind of different protocols and procedures, to operate in the United States. Beyond the US you have Canada, the borders are still closed but looking to open up soon, we hope. Also, some of the other Latin American countries, are a little bit more open depends on the country. So, everyone has their unique approach.

I do think there is a lot of positivity, about the vaccine, about things getting back to normal, and whatever that means, right? So, some of the things that we see how companies are kind of adapting to what is going to be the new normal, is the ability to work from home or work from anywhere. You will hear that term a lot, work from anywhere, there are a lot of people that used to go into the office every day, and now they are realizing, “Hey, you know it is not necessary.”

Just a great example, that is, many people in my neighbourhood that have moved from Manhattan, that are now in the mountains of Salt Lake, because they want to take advantage of the outdoors. And they are not sure they will ever go back. So, it is interesting to see how work will shift, and how we are utilizing technology like we are on webinars today. How many of us are on video calls, video conferences daily? So, it will be interesting to see how that shifts. But certainly, there are some proven strategies that are helpful, especially in the international space, we will get into that a little bit more. But just to touch base on that a little bit, is we are seeing quite a bit of expansion internationally, because companies are now saying, “Hey, I am going to hire that talent anywhere. I just want to find the right talent for our organization. They could be in Dublin, right? They could be in Singapore, and we are going to hire them. And how can we do that quickly, because it does not matter as much that they are down the street from us.” So, we are starting to see that shift a little bit and offices are starting to prepare for that.

I can just tell you, from our experience, our offices are open in Salt Lake, our offices in our headquarters in San Jose, California are not. And we have protocols to have people come back into the office, we coordinate times when we are all going to be there, again, with social distancing, and all those things. We can at least have that interaction together. But we are just not there as much as we used to. So, it is just kind of a new normal that we are all adapting to. And I think that will continue to change and fluctuate as we move on from the pandemic.

Bruce: Alright, thank you. I think that one thing that certainly a few people can say with any certainty what is going to happen is the future. I mean, by definition, the future is uncertain. And I think as Adam was just indicating that the people’s physical location. Think about it before the pandemic a year ago, let’s say, would you say that everybody had video capability? Probably the answer to that is no. Arguably today, at least in business, the capabilities are greater. I have seen some surveys from Price Waterhouse, for example, about when things go back to normal, second half of the year. And what does that mean and people do want to go back to the office. I have had some of my clients say, I missed the travel. When was the last time people said I miss travel?

So, people will be going back to the office the question I think everybody has to ask themselves is who’s office and how frequently? I am leaving that one alone.

Let us deal with this in a little bit more detail as we go to the next slide.

Bruce: So, again, we try to talk about Setup & Strategy Overseas. Here are, maybe, four indicators that might tell you a little bit about how you want to think about your neck of the woods. And the idea of doing that is just, Adam, do you want to start off with these points?

Adam: Sure, absolutely. And we see this, you think of expansion internationally, it is a growth that we help support this and it is happening all the time. Now, as I mentioned, hire anywhere or work from anywhere, we are seeing a shifting workforce, we are also seeing companies want to take advantage of other markets, right? So, if they were heavily involved in one market, and all of a sudden that shut down, that could hurt and we are seeing them diversify where they are going. And so, when you think about your strategies to go overseas or international, anywhere is what type of footprint do you plan on having in that country? Is it going to be small or is it going to be large? Do you have to have a warehouse space? All of those things matter to determine how you are going to set up your entity in that country, or you might not even set up an entity in that country. You might utilize an employer of record service that can help support that. But those long-term, short-term strategies and how big and how small you are looking to go into a country are important because it helps you establish the right setup that you need to put in place in that country.

So, there is nothing worse than doing too much or too little and then it can be really difficult to wind down an entity in the country if you decide to exit that country. You never went live there and we have seen that a lot from some of our clients, so we help them clean up some of those things. But there are all types of things that you need to be careful as to what is the normal payroll, what are some of the considerations when it comes to taxes? What type of accounting and compliance pieces are needed? What are your financials? How do they need to be reported in that country? Each country has slightly different rules, as we all know, and it is important to understand that right, how much of a burden is going to be on the corporation to go into that given country?

So those are things to consider, even now more than ever. What are the HR implementation realities? What are the HR laws, that you are going to have to abide by? COVID kind of changed some of those things become a little bit more complex? It helps to understand those things, and then what type of permanent establishment you are going to have in that country? Where your tax liabilities, right? What type of intellectual property do you have? How are you setting up your employee contracts and make sure you are protecting your intellectual properties? Are you trying to go with the contractor model, which does not protect it? Or are you trying to set up a different model, maybe contingent workforce wherever the case might be?

So, all four things to kind of consider, four buckets.

Bruce: Okay, I would add here, and maybe we could have our panel chime in about especially moving funds, or tax considerations. Tony, any thoughts about the ease of doing banking or taxes in the UK or especially in Ireland?

Tony: Yeah, what I would say there to Adam’s point, think about how large or big the company, the footprint you want in your country. And then maybe there is a solution that Global Upside has if it is not a lot of employees and even if it is larger employees, I am sure Global Upside has solutions there. But you need to think about setting up an entity or a company in the country. That has gotten a lot easier in the past number of years from an accounting and systems point of view. Online accounting packages are very widespread and common now and do not cost a lot to set up. So that allows the head office in the US to keep track of the management accounts and the financial records online and had a really good level of detail. And similar to your question, Bruce, around banking, you can set up banks relatively easily in countries like Ireland, UK, Luxembourg. And again, through online banking head office in the US can have visibility on those banking transactions, can even approve some of those transactions. But to your point on tax when you go into a country, you are going to have tax obligations in that country be their payroll taxes or some sort of corporate tax and, yes that you are going to have to file the necessary returns and send the necessary money to the governments in each of those countries. Because each country in Europe is different and if you have five or six different companies in all those European countries, you are going to have to pay taxes to each and every jurisdiction. You cannot group that in one, you have to go into all those. So hopefully, that addressed the question there, Bruce.

Bruce: Okay. Srinath, in terms of the Pacific Rim countries, any issues if you want to talk about around tax considerations or banking?

Srinath: I was thinking of actually starting with Setup & Strategy Overseas. So, there was a time when the business needed to be quite large for you to even have ambitions of going overseas and that is now outmoded, particularly for companies in Singapore, for example, because Singapore is so small geographically. Many businesses have to start thinking international from day one. So, in terms of, for example, I am in a business which is delivering training to banks around the world and I have been using just my Singapore registered firm as the basis through which I do these transactions. So, I have not had to set up offices elsewhere. What I do is network and I do work with I have alliances, I have representatives, and I have arrangements for business promotion. But as such, I have not had to actually set up an enterprise outside of Singapore. I guess a lot depends on the nature of the business, and particularly who you define as your customer. And that would be a great extent, also determine whether you actually need to have a setup there in terms of business development.

Then there is the legal infrastructure. Of course, the legal infrastructure is always a bit slower to catch up quite naturally. And, for example, Tony, made a reference to whether the business needs warehousing. So, if you set up a warehousing arrangement overseas, and you have discharged goods into a warehouse, who is the legal owner of the goods? So, is that going to be your distributor? Is that going to be some stand-in company? Or is it going to be a subsidiary? That is one more consideration that will determine what sort of setup you are going to have.

And finally, what type of business licenses are available? Again, every country has restrictions on what a business license allows you to do. Typically, the most, shall we say, restrictive would be the representative office. Branch and subsidiary may have more freedom to engage in activities beyond what a representative office can do, at least in terms of booking contracts with your representative office typically cannot. So that being the case, it is very much particular to the strategy, the customers the business. So, there is no one-size-fits-all solution.

Bruce: Okay, let us talk a little bit more about talent. I would only say that I am a great believer in technology. I think when you are dealing globally, it always helps to have the ability to talk to any of your offices around the world. But at the end of the day, you need the talent to complement technology. And I think that is the sort of the new workforce that we want to speak to. So, we can go to the next slide and maybe Adam you could talk a little bit about what is needed here.

Adam: Sure. Yes, perfect. I appreciate that Bruce, and Srinath, thank you for that, too. Thank you for that point about setting up the office, making sure that you do the right type of entity. I cannot stress that enough. And if you think about it, so once you decide you are going to set up in any given country, now you are “Okay, we are going to hire employees. How are we going to do that?” Is that going to be through our subsidiary or branch, or use a company like an employer of record service of Global PEO company? Like, what we have a Global Upside Corporation, one of the things we do. It depends on your needs, and we walk people through that. But going to that point where once you have made that decision, you are going down that path. Now you have to say, “Okay, what is this workforce going to need? What are the things I need to be aware of?” And important to understand, what type of capabilities, work from home, what kind of infrastructures just tools that they need? What do you have in place to bolster this? One of the things that happened for us, I am using the example we have hundreds of employees around the world, okay, we have hundreds of employees in India, one of our shared service centres, in Noida, and, they primarily would work in one office complex. And all of a sudden COVID hits, we were prepared, we saw it coming, we had the right laptops versus desktops and all those type of things so people can work from home. But those are things you need to make sure that you are able to have those type of remote worker capabilities today, is a must. And then it is “Okay, what do I find talent? Where do we go? What am I looking for? Who are the best places to help us find this talent?” There are companies like us that help companies find talent worldwide, to help support whatever they are looking for, a good network that we utilize at a local level to help provide that.

And then the things to consider too what are the employee expectations going to be in that country? There are going to be cultural norms in those countries. So, you have to understand that expectation, what type of tools do you have to interact with them? And to communicate with them? Are you just going to leave them out on their own, and they are trying to figure things out? What type of training you have in place? What type of communications you have? We see this a lot with our clients, they will have an HR system that is based in the United States, and they are like, “Oh, we will just put them on that?” Well, no, you cannot just put them on that. There could be GDPR compliance issues with doing that. There could be language barriers, because of it. There could be information that needs to be tracked if that system does not track so that system does track that you cannot track in that country. So, there are compliance implications when it comes to just something as simple as an HR system, and will it work in that country? And then we all know, there are payroll challenges, right, money movement. I am sure we will talk a little bit about that. Getting payrolls funded in the different countries, because that is critical that you pay these employees properly. You pay them with what is expected in those given countries. So those are things to consider when you are hiring that new workforce for you.

Srinath there might be something you want to add to that around banking, or some of the requirements around.

Srinath: Yes, a couple of things when it comes to the new workforce, the two things that I would like to just make a mention of is clearly going to be a significant change in what we consider employment to be in managing people. Because working remotely, we have most focused when we are thinking about performance metrics, where we are thinking more about outcomes than completion of tasks, that is one. And second is that increasingly, I believe that going forward, the traditional model of somebody being hired as a full-time employee of the company, those type of opportunities, are going to reduce. Because if there are functions and those functions require particular skill sets, there will be individuals who will offer their skill sets on a time basis or on a project basis. And they may not wish to tie themselves up with one employer. So, I anticipate just observing some of the younger generation, how they are thinking and how they are talking about, what they see happening in their future. They are all thinking about, being skills for hire, rather than being a salaried worker. So, I believe there is going to be quite some change. What does worry me a bit, that is probably because I have grown up in the world where we all went to the office, is how do you achieve effective bonding amongst your workers? How do you manage culture? How do you develop a culture, a cohesive culture? I do not know whether Business School professors have any answers to those type of questions, or the consultants have something to say about it. But that is something that I find worrisome. So again, dealing with a lot of uncertainty. When it comes to banking, I thought I would just reserve that for the slide when you will be showing something about accounting and compliance. Would that be okay?

Adam: Sure. That would be great.

Srinath: All right, thank you.

Bruce: Alright, Adam why don’t you to talk a little bit more about HR and payroll again, I think it is pretty clear that people really are going to be the important resource here.

Adam: Yes, absolutely. I just wanted to touch a point a little bit too that Srinath just mentioned about the culture. How do you keep that in a remote work environment? And I will just use, for example, some of the things that we have done again, we are an international company and it is interesting, that is a big thing, we actually schedule a time to hang out with each other, teams and company-wide, we have some fun games online, that we play together, that we have some great trivia-type things, which makes it a lot of fun. We also, part of what we do for our clients and internally, is we put together a wellness program that people can log into online and have live sessions led for yoga, those type of things, which has been really helpful for our company, even though we are not quite getting on a flight and seeing each other like we used to, but still stay connected. And it is important that we continue to focus on how to do that because that is an important part of who we are, we are human beings. And it is important that technology helps us do that and those are things to consider, as you expand internationally in different countries. Speaking of which, when we go into that HR and payroll, there are some things important, especially now more than ever, this HR, I cannot stress it enough, laws are changing every day around this. We see, we used to see, and we still continue to see companies that will have put my fingers in quotations. A contractor, they will hire contractors in countries and there will be the challenge with that is, sometimes those are not set up properly on that contractor level and the social benefits and social things are not being paid properly. So that can be a real challenge to the company. There could be a lot of challenges and issues, being out of compliance with those things, also becomes a challenge with intellectual property. Well, if they are not your employees, and it is not your intellectual property and it becomes this huge thing. So, what we are seeing is a big shift to get everyone compliant. And what we talked about they will set up their own entity, many different options, like you mentioned branch, subsidiary, rep office, depending on what you can do in that country. But we are also seeing a lot of PEO or employer of record services. Same thing here PEO, global PEO or employer of record does the same, or that company steps in, like ourselves, we do that to help them. We hire our client’s employees for them. So, we have an entity in that country, all of the things we are their employer record to make sure all the compliance pieces are taken care of. We do the employment contracts, which are really important. You understand the work councils that are involved in some countries. There are all types of regulations when it comes to time and time and attendance. There has been some new laws in Europe that has passed even if you are a salaried employee, you have to track time in some instances internationally or in Europe, specifically. So those things are important and you have the capabilities to know what those Wage and Hour laws are. You have that type of thing that you have in place. What happens then when there is a termination where you do need to let someone go, and what are the issues if there is a breach with GDPR data, employee data, because you are sending it to the wrong areas, all of those things are important to understand, that are becoming more complex. Because each country is trying to make sure that they get their piece of what they are owed, if that makes sense, those governments. The other things to consider on the HR side is the benefit piece. So, benefits, we put them in three different buckets in the United States we are used to our employer giving us benefits and it’s used some type of plan and it varies by state. But internationally there are social benefits, typically in every country, and those are statutory in nature. So, everyone is going to be compliant in that, and they need to be compliant in that. And then you have the pieces like supplementary benefits, where it is on top of those statutory benefits. And then there are in some countries where that we call customary benefits, where that is the standard even though it is not a requirement like statutory, but it is the standard for you to employ somebody there that you need to make sure you have those benefits. And then when it comes to payroll, we have talked a little bit about this, right? There is no big global payroll engine of the world, all your big payroll providers, and we as one, but we still process locally because you need to process payroll locally to pay people. So that is important that those things are done right, that the taxes are filed properly, that there are no issues coming back to you as an employer. We see a lot of companies that have made some mistakes there. They have gone through a local provider that they did not really know and that it came back to haunt them a little bit. And then what are the hire-to-retire requirements? What are the ongoing HR needs that you have? What is your expertise in that given country to be able to address your new employees, questions that may come up? It is a lot easier if you have an employer of record solution where you just direct it to the employer of record. But in some countries, when you have your own entity, in your own subsidiary, do you have that expertise and that knowledge to handle those things. So, we are seeing that HR and payroll component is important, internationally with your expansion. But the good news is, new employer of record services clean up a lot of that, make a lot easier, but also helps you transition to when you are ready to set up your own permanent establishment with your own subsidiary. So, the transition is a lot easier than it used to be in the past, even though the complexity still there. Bruce?

Bruce: Sure, now let us try to see if we can create a framework for the future here, as companies think about expanding internationally. I mean, obviously physically traveling is very difficult to do these days. I was just reading something the other day about going to France and it depends on whether you like to stay in a hotel room for a week. And I think with Singapore, I believe you check into a hotel room at your expansion, they put an ankle bracelet on you.

Srinath: Well, that all depends on as far as placing the cost of it is concerned, citizens and residents, as far as I know, are still covered by the government. So, they do put you up in a hotel. And no, I have not heard of ankle bracelets being used. But they do check that you are not slipping out of your room, that you are quarantining yourself as accurately as is stipulated. So, it is more about enforcement and they make spot visits. And sometimes they ask you to use your camera and point to a particular feature in the room and they know it is there. So, stuff like that but no ankle bracelets.

Bruce: You may be right, maybe you just have to download an app that keep track of you. But the point here, I think is that as you travel around, you do have to be concerned with a format and a structure for the future. And this slide here is really what we are trying to get to, which is, you are talking about some of the accounting and compliance and tax issues. So maybe we can get, again, the panellists to talk a little bit about, we have talked a little bit about this, or have not talked earlier about the company law and compliance here. But when it comes to accounting and finance, Tony, what are your thoughts around let us say, looking at the accounting-finance structure that a company outside the US would have to consider?

Tony: Yes, it is a good question, Bruce and it comes down to there are various types of entities you can set up. But if you are setting up a common corporation like you do in the US, you have to set up that entity, you have to keep the books and records of that entity. Depending on the size of the revenue, you may have to have external orders, or audit exemptions, for example, in Ireland and UK for revenue below a certain level. If you think about the things that you have to do for a company in the US, if you are going into multiple countries in, say Europe, you are going to have to carry out those activities in each of those jurisdictions. So that is why Srinath mentioned it earlier picking a base, say, in Europe, if you are wanting to come to Europe you tend to try and pick a kind of a regional location. And be that Ireland, the UK, Luxembourg, Switzerland, there are different countries that are frankly good in that area. Because from a language perspective of the English spoken in UK and Ireland, lots of labor laws are probably closer to the US, in Ireland and UK than in other jurisdictions in Europe. So, you have to think about, well, if I am going to go to three or four different countries in Europe and set up an operation there, I have to do all the same things I do for a US Corporation, except I have got to do it multiple times. So, to Adam’s point, you have to think about as you are expanding out of the US, where are you wanting to go, and maybe you are kind of dipping your toes in the water first in one place. Maybe that employer of record solution that Global Upside has. But when you move to an entity, you have got all the statutory obligations of kind of that entity. Now, I think a lot of that has gotten easier Bruce, in the last number of years, as I say, with online accounting packages, online banking, so finance team in the US should not be nervous about not having the visibility, and you do not have to set up this for quite a lot of money, you do not have to put in a big EOR/PEO type solution. Even a QuickBooks-type solution allows you access to all that information from the US. So that is just a couple of thoughts from my side.

Bruce: Okay, and Srinath, any thoughts about accounting and finance issues? In Singapore and the Pacific area?

Srinath: Yes, I can speak for Singapore. Singapore, as you are aware, sets itself up as the gateway to Asia and invites businesses to set up their regional offices, and in some cases, even their global headquarters in Singapore. And there have been some significant American corporations, which have done that. Move their head office to Singapore, probably that is where they see the future in terms of where their markets lie. When it comes to accounting, and finance, again, the talent that is locally available recognizing that we have international companies in the country. Therefore, there are needs, local needs in terms of reporting to the local authorities, as well as reporting back to parent base, wherever that might be in the world. And there is now quite a diversity of talent available within Singapore to be able to cope with the statutory requirements, depending on the jurisdiction. So that is one part.

The second part, we talked about human resources just a short while ago. So increasingly, particularly for American corporations, there are a growing number of people who are qualifying with the necessary licenses and qualifications that are required by US companies when it comes to maintaining accounts and financial reporting.

So that is another, shall we say, facility that is available. If I could just touch upon banking because that is something you asked me about earlier. That can be difficult because we are now living in an age where banks have very onerous responsibilities when it comes to deciding who they take on as a customer, and what type of banking transactions they may be permitted to perform. So, I think you had a speaker and a FENG speaker who spoke about banking relationships, internationally. And a lot of what he said did resonate with me in terms of how difficult it has become for foreign businesses to open bank accounts, where I might choose a different path would be using introductions from my existing banks. If they are willing to make those introductions, that would be a good start. But otherwise, be prepared for very detailed information to be demanded. And that the account does not get opened immediately as instantly as you would expect it to be. It might take a few weeks, and in rare cases, might take a few months. So, it has become a lot more complicated and it is really because of the compliance obligations that banks have to observe now. The customer due diligence they have to do, the KYC they have to do, it has become quite insane, I would say. But that is something we have to live with and account for when we are thinking about setting up overseas.

Bruce: Let me ask you a question revealing my ignorance here is Singapore, like some of the other European countries where if you are setting up some sort of operations, let us say in Dublin docks area or in Luxembourg, do you have to hire a minimum number of people?

Srinath: Again, it depends on the nature of the business. If you are a large corporation of course every country would like you to hire the local people and Singapore also emphasizes that but it all depends on the type of talent that you require and I guess one can reason with the authorities here as to the need for a particular talent that may not be locally available. But yes by and large there would be a need to populate the office with a significant component of locally sourced workers.

Bruce: All right, so Adam have you found that to be true in some of the other countries that Global Upside works in?

Adam: Yes, absolutely. We found that to be the case. There are certain requirements you have to have when it comes to local nationals to be hired in those given countries. But to the point, Srinath, is in Singapore there is a lot of talent, there is a lot of really good local talent in Singapore. And Singapore makes it easier for you know work permits and things like that for people to come in but still, you know there is a lot of local talent there to be had and we are seeing the trend where companies are looking to hire talent wherever they may be. Right? They might not need that person in the Bay area like they used to. If they are fine to have them in Singapore, they are fine to have them in Poland as long as they can make the hours work and supply the right type of working situation we have been talking about. But we have seen that to be the case that companies are trying to find talent anywhere wherever that might be. But there are local requirements from whatever country that might be.

Srinath: Bruce, if I may add to what Adam just said.

Bruce: Sure.

Srinath: So, yes absolutely Adam, I agree completely with what you just said. But just as a guideline I guess for anybody thinking of expanding overseas, I think it is best to plan on the basis that you localize employment to the extent possible and have a minimum need to have somebody from the parent company actually have to come across except for probably an initial period or an initial term. But localizing would be the best option going forward.

Bruce: All right, so the idea that we now want to move forward and try to create a plan again, timing, hard to say I think that sometime in the latter half of this year maybe you could pull the trigger on whatever plan you had or it might even be 2022 again depends a lot on your businesses of course. But at the same time as you are thinking of your plans you also want to avoid some of the common pitfalls that others fall into. And so, Adam, why don’t you start off with some of the ideas or pitfalls that you have seen, and then we could maybe fill in some of the detail.

Adam: Yes, for sure. So, I will just briefly touchpoint on this and I know we have been talking a lot about some of the challenges, some of the nuances internationally but there are huge advantages of expanding it globally and taking your business outside of your current countries that you are in. But some of the things to be aware of is you want to make sure you strategically think about things at a global perspective but you have to realize you need to execute locally. Right? There is still the local component and it is very important to understand that you drive to that. Just like Srinath has mentioned that try to maximize the local talent in those countries, right? You do not need to hire expats for a long-term strategy, maximize your local talent.

The other thing is to keep in mind is the cultural considerations, there are different norms in certain countries than in others. It is important that you understand those things like, I will give you an example, one of the things that people always kind of get caught up in and this is in like Brazil there are 14 payrolls. It is a monthly payroll and there are 14 payrolls. Well, there are not 14 months right, but there are certain times where you actually have to pay an additional payroll run when they go on vacation and then during the holiday time, around the end of the year, or the holidays. So, there is an additional payroll that is given to them as well. So just little nuances like that if companies are not aware of that might surprise them especially if they did their employment contracts for 12 months and x amount per month and then they realize there are additional pieces that need to be addressed.

So those things are really important to understand that you take advantage and utilize those things properly and then do not do this alone. I cannot stress that enough there are great partners, the people on this panel, there are great people to work with. Do not try to figure it out on your own it is too much time that it takes, it is too much money to do it on your own. The cost is 10 times to fix a problem if you would have done it right the first time so just find someone that is good, work with them to help you avoid some of these things, challenges that you might deal with. And then there are all types of when we have this down to some common pitfalls but when you go into mergers and acquisition, that is a big that is a whole new kind of nuance. We are not going to get into a lot of comfort that could be a whole another session on its own but understanding that due diligence stage of the business. Understand what type of complexities you are going to run into on the HR side, you already know the financials and taxes but really understand how that HR component can impact that deal and what you are going to do with that employee? Are they going to stay on or not? So those are things to make sure you plan in advance so you do not have this all of a sudden “gotcha moment” where you thought you could just terminate all these people and you do not realize the cost of doing that and the severance and those type of things that you might not have planned for.

So those are some of the pitfalls and we can go into more detail if you want Bruce.

Bruce: All right. Tony any thoughts about how these pitfalls might work or how to avoid them in specific countries, again, like the UK or Ireland.

Tony: Yes, I think Adam said it there. You want to speak to someone perhaps who has done it before or assist companies in doing it, I think that is kind of it in a nutshell. I do not think you make sense to go and establish a presence in four countries right away. I think countries like Ireland are a good gateway to Europe, there are approximately 700 plus US companies that have a presence in Ireland. A country like Singapore, Ireland, England share a language with the US which is helpful. So yes, I would really kind of echo what Adam says because you can get yourself into difficulty as any company in the US will know that as well, if you do not get your sales tax right and you do not pay that to all the various jurisdictions you can end up and bother. So, you want to get it right from the get-go and do your due diligence, do your research, speak with people perhaps in your network who have done it before, and can recommend different partners who can help you.

Bruce: Any thoughts about how these pitfalls would work or others that you might want to be aware of, let us say, in Singapore?

Srinath: Well, the one that seems the most interesting from this list is finding the right partners and it is not Singapore-specific. It is the all-Asian region where relationship matters, it is a very important part of the customer relationship and a lot of time is spent by businesses in cultivating those relationships before in fact even business gets done. And once the business gets done maintaining those relationships. So having the right partners is one of the secrets or one of the important ingredients for success right from the time that you have a local director or a couple of local directors down to the joint venture partner that you might be working alongside. So, they can bring a lot of value to how you strategize the type of people that you hire, the way you go about pricing your products, the advertising strategies. A lot of things would have to take into account local customs, local practices and local preferences and so the need for the right partner and particularly a local partner just cannot be underemphasized.

Tony: Yes, I would add on to that. I think the cultural differences to me are what I found in doing some traveling around the world. I am going to be honest; I am unaware of the various holidays that countries have and whether you are in the Middle East or even in Singapore or other countries with different religions and certainly different cultures and people who are the leaders of those countries in the past. So, there are holidays that can make work scheduling difficult and that of course can be compounded by the whole issue of foreign exchange which is something to consider when you are doing business. If you have offices in different countries some currencies are stronger than others and depending on whether you are a supplier or a user of those currencies, so again it comes to the heading of the complexity of global M&A. Looking at your exposure means that if the dollar is strong or the other currencies are weak then you are getting earnings in a weak currency how often it is not good for your performance goals and of course the opposite depends on which countries and currencies we are talking about. But in terms of avoiding some pitfalls, I have had CFOs in US companies tell me that they do not have any foreign exchange issues because they sell in dollars. Well, selling in dollars into a non-US dollar country means that all you have done is you have shifted that foreign exchange exposure to someone else who has to sell euros and buy dollars and pay you. So, depending on which way the rates are going, you could be reducing your sales possibilities or it costs you more money if you are, let us say, trying to fund expenses in a strong currency like the Swiss franc. So, there is an issue there to think about.

Bruce: Okay let us go on to, we have talked to maybe specifics but it is we have come back here. Countries have their own rules and regulations and you might have got a flavor by now that some countries are easier or hard to do business in and maybe Adam do you want to talk about some of the countries on this list?

Adam: Yes. Some of the trends that we are seeing right now for global expansion, a lot of these companies on the list are a little easier to do business with for sure. But we also see them for different reasons, Canada is a given, but we have seen India has an increase and so is the Philippines. They have always done a great job with customer service, technology development in those countries. But now we are seeing more of a shift to manufacturing in those countries as well, away from China. So that has been an interesting trend that we are seeing and then the Eastern Bloc countries, they are all stood in block countries, Estonia, Czech Republic, Poland. We are actually seeing them, a lot of companies are looking to go there as well for their development, their IT teams that we have seen that to be a big expansion for that space as well. So those are just some of the highlights of some of those countries that we have seen with our clients and why they are going there.

Bruce: Tony, do you want to talk to some of the countries in the EMEA area?

Tony: Sure, absolutely. I will give a plug for Ireland obviously since that I am based here but Ireland has a long tradition of working with US companies that expand internationally. Over 700 US companies in various industries, financial services, and medical devices, pharmaceuticals, technology are here. We are in the EU; Ireland shares a common language and so that is a place to consider if you are coming to Europe. I agree with what Adam says as well, Czech Republic, Estonia, eastern parts of Europe from a services point of view are really interesting and from an IT point of view the cost base is lower than Ireland or the UK. So, Ireland probably would place itself maybe a little bit up by the value chain. Luxembourg is another country easy to do business with from a financial services perspective. The UK, I do not have it here, the UK is still a great country, a great market but we have the complexity of Brexit with the UK exiting the EU on the 1st of January this year. So, there is some kind of uncertainty with the UK because it is not part of the EU right now and moving to the UK as a base for your EU or EMEA operations. There is some kind of, how they say, kinks that need to be ironed out in that, so from a financial services perspective London will continue to be an important market but as I say with Brexit it is just complicated factors. I put in Portugal there as well. Portugal is an interesting country from a cost perspective a little bit lower than countries like Ireland, UK, Luxembourg, Switzerland and I think they are really good in the digital space and the technology space. So that is a whistle-stop tour of EMEA Bruce.

Bruce: All right, and Srinath what about some of the APAC countries we have got mentioned here?

Srinath: Well, you put India on the list so since I have already spoken about Singapore let me just say a few words about India. Again, it depends on how the shifts in India affect your business. If you are viewing it from the perspective of a US company looking to expand internationally so factors like the fact that a very significant proportion of the population is less than 35 years old and therefore that is something that will affect demand, increasing urbanization. Young people do not want to work in the farms anymore they would like to come to the cities even if their standard of living is poorer but they still would like to come to the city. Growing middle class with the ability to do more discretionary spending that is another, shall we say, a factor that could influence a US company’s decision to expand into India. India has gone through various, shall we say, philosophies when it comes to economic development. For a long time, it clung on to the idea of import substitution and they were doing that while east Asia was focusing on export promotion. Import substitution worked in parts for India in terms of the fact that it helped the industrialization of the country but in terms of cost-effectiveness and efficiency and all that it did not work for India. So, India shifted its policies in 1991 to a more outward-looking approach but in recent times there have been slogans about self-reliance and all that, so again India is becoming a more prospective location for manufacturing or processing. Again, depends on the type of business you can take advantage of the talent that is available in India, the environment, and the market that India provides, then it would be an interesting opportunity. India does come with its challenges the way things are done might be somewhat different from what you are used to in the United States. But then, as I said, if you have got the right partner and you have got local employees to cater to your requirements, then I am sure if you persevere you do manage to get through it. Again, India is a long-term strategy you are not in it for one or two or three years. You have got to come in and really put your roots down there and invest time and effort and money into growing your business. But if you get it right as some companies have or rather, many companies have then yes, you would say it has been a good investment.

Bruce: Okay, thank you. I think we are hitting that sort of magic one-hour mark. So, we do have time for maybe one or two questions and then I think that we are going to conclude this webinar. Here is a question that we received:

Do you have any guidance on directors and their, sometimes, personal liability or the need for resident directors in some countries? Recently we had trouble making banking arrangements in Australia and the requirements for a resident director are that common.

Adam: Yes, I could speak to that. So, the resident director is really important in these countries. First of all, we have seen a lot of times where companies will utilize someone that they have hired there or a new employee. We do not recommend that because they do have a lot of power. We utilize some local third parties that are law firms, they could be resident directors. It is not a huge expense but if they do not do anything and that is part of some of the things that we have in place with them, they are not going to do anything that is going to jeopardize your organization in that country. There are some horror stories out there of resident directors selling businesses and not even knowing about it. They have the power in some countries to do such things. So, it is important that you get that right because it is important that you have it because to your point with the banking relationships, the KYC, all of those things need to be disclosed to those banking arrangements. So yes, again do not try to just “Oh, this is our employee there in Australia, so we are going to have that person be the resident director.” That might not be the best decision because what if you have to terminate that employee? Now you have to rewind and that person being the resident director and the challenges that are associated with that. I hope that answered the question.

Bruce: All right, thank you. I think we have got time for one more question and I think we are just going to call this a day here.

Over the past decade there has been a notable shift with businesses favoring outsourced options due to the flexibility and efficiency they provide. How has the current business environment affected this shift and do you see this trend continuing in the future?

Srinath: I could, perhaps, offer an opinion here. Businesses are always in search of efficiencies and lower costs. So, I do believe it is a trend that is going to continue in the future. What will change and what has already happened is the location where the offshoring is done to. For example, a lot of the offshoring that used to happen in India has now shifted to some of the ASEAN countries and vice versa. And now the language in which services are provided is also important. So, if for example, you have a significant footprint in China, it is absolutely essential that you must have service personnel in China and likewise in Thailand and many of the other countries in the region. Asia unfortunately is quite complicated in terms of the number of languages and cultures that we have in this one landmass. So, it is an investment that you have to make. But if it is the English language then you have got a greater choice of countries to choose from and then it is a sort of a trade-off between efficiency and effectiveness and costs.

Tony: I will just chime in there Bruce as well. I think outsourcing and working with different partners even multinational companies and definitely for small, medium-sized enterprises is here to stay and I think it is only going to grow. You talk about countries and Srinath mentioned languages there it is possible to go to certain countries, again I mentioned Ireland, a lot of different languages available here same as the UK, same as Luxembourg, same as Singapore. You could go to Singapore and get all the languages you probably need there. So, you need to think about that and Adam’s point around directors, that question was once answered earlier. Again, you can get an outsourced arrangement there. Directors have a lot of responsibilities, have reduced your responsibilities within a country so you can outsource that. The other thing you think about directors is from a tax point of view you have to have your permanent establishment or your residence is in some way impacted by directors as well. But outsourcing is definitely here to stay and working without outsourced partners is here to stay and grow, I would say.

Bruce: Okay.

Adam: Yes, I agree with everyone, what they have said. I do think the barriers to entry to these countries with models like an employer of record model are a lot less and it is a lot safer and so I think that will continue to expand and grow and really take companies that have always been a little nervous about taking on all the responsibility when they go international. And they will pull the trigger so to speak and go and expand internationally that way. So, I do believe that will continue to grow very rapidly from the years to come.

Tony: Yes, the opportunity is big, Adam, right? So, there are risks and downsides but it is not just about risk mitigation. The upside is in your name, the potential is there.

Adam: Yes.

Bruce: All right. Well, I think we have gone past our allotted hour here so I would like to bring this to a conclusion if for no other reason then people have to get to bed or have lunch, one of the two. So, with that, I am going to end the conversation. Again, if you do want to write to any of the individuals with questions that you did not want me to read, then you have email addresses here. You will get a link to the video and a copy of this slide shortly. So, with that, I would like to thank all of the panelists for your efforts and I am sure conditions will change and we will be talking about some of these issues again later this year.

Adam: Great, thank you.

Speakers

Adam Sheffield

Chief Revenue Officer, Global Upside

Adam brings more than 15 years of experience leading sales organizations in the HCM and Professional Services market. He currently oversees the global sales organization and helps Clients navigate global workforce complexities in over 170 countries. A true entrepreneur at heart, Adam is tenacious in designing strategy and mentoring teams to forge strong client relationships and transform the way businesses manage growth. Prior to Global Upside, Adam has held a variety of leadership roles for ADP, one of the world’s largest outsourced payroll and HR companies, including Vice President of Sales, Global Enterprise Solutions, for ADP in North America.

Tony Ahern

Finance Director, Takeda Pharmaceuticals

Tony currently holds the role of Finance Director at Takeda Pharmaceuticals. He started his career in audit department of KPMG. Tony has over 25 years’ experience in senior finance roles including roles in multinational biotechnology, pharmaceutical, and software companies. Tony has strong international experience gained from senior finance roles in Europe, US, and the Asia Pacific. He is a Fellow of Chartered Accountants Ireland and a member of Institute of Directors Ireland.

Srinath Keshavan

Chief Executive, Trade Risk Consulting

Srinath Keshavan is an experienced consultant with a focus on international trade and banking. He was a commercial banker in Hong Kong before leading the Trade Finance & Risk function at several commodity trading firms in Singapore. Srinath now offers his expertise in the capacity of a trainer/consultant, and over the past 20 years has delivered trainings in 50 countries. Srinath’s specialization lies in structured trade and commodity finance, banking practice, transactional risk analysis, financial crime compliance, and relationship management. He also supports a fintech enterprise with global reach.