As traditional consumer markets mature, companies are increasingly seeking the greener pastures of new and emerging markets. Typically, entering these markets requires the establishment of a foreign entity – often a laborious and expensive process filled with regulatory roadblocks. Global Employer Organization (GEO) services can provide a cost-effective and efficient way for companies to expand into new markets. This white paper explores how GEO services work, and how, for organizations of all sizes, they can provide a quick, flexible, and cost effective solution to successful global expansion.
As more companies enter more foreign markets, the clearer it becomes that the costs are often substantial. Legally deploying staff to foreign locations can be prohibitively expensive and time consuming, as companies must dedicate resources to remaining compliant with each country’s immigration requirements, as well as worker employment and taxation. This white paper describes how GEO Services can help companies virtually eliminate these issues by providing them with the services required to easily and compliantly deploy staff in foreign jurisdictions – and at a fraction of the cost of establishing a legal entity. By working with a GEO, companies can deploy staff in weeks vs. months, work within defined budgets (costs are fixed), eliminate the need to source and manage local vendors, and significantly reduce HR’s administrative burden.
It’s well established that over the past two decades, and particularly following the global financial crisis (GFC), that many U.S. companies expanded beyond their traditional domestic markets. It’s also well established that for many, this has produced highly lucrative results One of the best-known examples is Walmart, the top-ranking firm on Fortune’s Global 500. Since 2009, during the height of the GFC, Walmart’s international sales grew 38 percent, from $99 billion in 2009 to $137 billion in 2014. During the same period, Walmart’s U.S. sales grew only 11 percent.1 2 3
This was also the case for many other U.S.-based multinationals, which, since the 1990s, have steadily increased their global presence. By 2010, for every dollar of goods exported by U.S. MNCs, their foreign affiliates sold $6.48 in goods.4 In other words, international revenue was about 6.5 times more likely to come through a foreign subsidiary than an export. Between 1991 and 2011, value added from foreign subsidiaries grew by over seven percent versus less than two percent for U.S. domestic revenue.5 During the same time period, sales from these foreign subsidiaries rose from 24.5 to 35 percent of overall sales.