- 72% of companies planning overseas expansion in next two years
- Legal and regulatory challenges seen as biggest hurdle
In a sign of increasing globalisation, our new study amongst corporate clients reveals that almost three quarters (72%) of business leaders expect to see more companies setting up overseas operations between now and 2024 compared to just 5% who believe it will fall.
We surveyed a global sample of 100 companies ranging from start-ups to mature multinationals about their expansion plans.
Over half (56%) of respondents said they plan to expand into up to three markets in the next two years with a further 14% aiming to break into four to six new countries.
According to the findings, attractive market conditions, demand for similar products and services and the country’s size and potential are the three biggest drivers influencing business leaders to move into new countries.
Despite the strong appetite for cross-border expansion, it takes companies on average seven years to move from operating in one country to multiple markets and according to Intertrust’s research, the process is far from straightforward.
The five biggest obstacles companies say they have faced in setting up new operations are legal and regulatory challenges (53%), recruiting and retaining a local workforce (28%), hitting their business plan growth targets (23%), marketing and sales challenges (21%) and political issues (14%).
Intertrust’s study underlines how expanding companies often outsource key functions to a specialist provider with a local presence so they can focus on growing the business. One in three respondents (33%) said they have either have or would outsource payroll, HR and tax functions while 28% and 16% would do so with legal and accounting reporting requirements respectively.
Evert Wind, Global Head of Corporate Client services says:
“Despite political and economic uncertainty, business leaders are bullish about growing their territorial footprint. In an increasingly global economy, the upside can be considerable but expanding into multiple markets is a complex process that’s fraught with risk.
“In our experience, businesses often overlook the practicalities of operating in a new country such as setting up a new IT platform, hiring a skilled workforce and dealing with local regulations and tax issues. Local knowledge is key and we’re finding that companies of all sizes are increasingly turning to locally based professional service providers to help them find their feet.
“Companies looking to set up an overseas operation should plan ahead, conduct effective due diligence, connect with other organisations who have made a similar move and work with a local law firm or accountant who know the business and can make the necessary introductions to other reputable support service providers.”