Expanding into new markets is ultimately a growth decision, but in practice it very quickly becomes a legal, tax, HR and operational project.
The challenge is not only to identify attractive countries, but to understand how each jurisdiction will affect your cost base, risk profile and access to talent over time.
When you start thinking about new markets, the questions come quickly:
- Which regions and countries actually make sense for scaling my business?
- How do I shortlist markets based on taxes and total employment cost?
- Where can we find the right talent, and what do these people really cost?
- How do we stay compliant with local labour law and regulations?
- Do we really need to set up a legal entity in every new country just to test a market?
Over the past decade, I’ve worked in international employment and labour law at Acumen with founders and leadership teams expanding into new markets for different reasons: scaling operations, accessing talent, supporting existing customers, or establishing a presence closer to clients and delivery teams.
In almost every case, these questions surface at the point where expansion is agreed in principle, but the organisation has not yet committed significant time, budget, or internal resources.
In practice, international expansion unfolds as a sequence of decisions, each narrowing what is possible next.
The table below sets out the key phases, the questions they answer, and who typically owns those decisions.
| Phase Name & Decision Focus | Key Considerations | Primary Decision-owners |
| Determine Right Market | • Right market set • Entry & exit ease • Favourable tax regime (ER/EE) • Employment cost assessment • Cross-country benchmarking | CEO, CFO, COO |
| Determine Mode of Entry | • Entity setup • Representative office • EOR• Entry & exit ease | CEO, CFO |
| Determining Hiring Model | • Full-time employees • Independent contractors • Compliance issues • Employment cost comparison • Tax issues | CEO, CFO, CPO/HRD |
| Talent Acquisition | • Global mobility • Immigration rules • Business visas & work permits • Immigration compliance | CEO, CFO, COO, CPO/HRD |
| Employment | • Immigration checks • Onboarding • Employment agreements • Contract signing | CFO, COO, CPO/HRD |
| Talent Management | • Global payroll management • Payroll compliance • HR compliance • Tax administration & reporting | CPO/HRD, CFO |
| Talent Retention | • Mandatory benefits • Voluntary benefits | CPO/HRD |
Phase 1: Expansion Strategy & Market Selection
This phase translates a general ambition to go global into a concrete market entry plan: identifying which regions to prioritise, comparing countries on tax, employment cost, risk and talent availability, and defining a clear sequence of entry that aligns with the company’s growth and capital plan.
- Selection of target countries
Based on your industry and business needs (technology, services, R&D, production, customer support, sales), we narrow down the countries that are a practical fit for your operating model.
2. Tax and employment cost analysis
We assess salary levels, employer and employee social security contributions, mandatory allowances, and, where relevant, the impact of local VAT and other employment-related costs to understand total employment cost by country.
3. Labour law and operating conditions
We analyse labour codes and in-country employment conditions, including local requirements, probation periods, severance exposure, notice periods, and termination practices.
4. Talent market mapping
We evaluate the availability and depth of talent in each country, including accessible skills and seniority levels, language capability, international experience, the presence of relevant business or technology hubs, and overall market depth.
5. Salary bands and payroll models
We build realistic compensation ranges and payroll structures for proposed roles, including estimated monthly total cost per hire, to enable consistent comparison across markets.
6. Macro and economic risk assessment
We review broader economic indicators such as inflation, currency stability, and market maturity where these factors materially affect employment cost and workforce planning.
7. Compliance landscape
We map core compliance requirements relevant to foreign employers, including labour regulation, data protection obligations, and jurisdiction-specific restrictions.
8. Geopolitical and regulatory risk review
We factor in geopolitical developments and regulatory trends that may affect medium- to long-term strategy, including political stability, sanctions exposure, and potential policy shifts.
People shape expansion decisions
International expansion is often discussed in terms of markets and opportunity, but it is experienced through people.
The moment teams start forming across borders, differences in employment rules, cost structures, and legal responsibilities become visible in ways that strategy alone does not capture.
Paying attention to those details early allows expansion to stay flexible and keeps decisions reversible.
Irina Dontsova
Global Expansion Consultant
Phase 2: Exit Before You Enter
Once markets have been shortlisted, the next question is not where to expand, but how to operate there in practice.
For most modern businesses, expansion no longer starts with buildings, factories, or heavy local infrastructure. It starts with people. International teams are hired to support existing customers, deliver services, build new products, or test commercial demand long before there is any need for a permanent local setup.
This creates a practical tension. Employing people in a country almost always implies some form of local presence, but the level of presence can vary significantly.
The decision in this phase is therefore about how much legal and operational weight the business is prepared to take on in order across the borders to hire and operate locally.
In simple terms, companies must decide whether they are ready to establish their own local entity from the outset, or whether they need a way to operate and employ people locally without locking themselves into a permanent setup while assumptions about the market are still being validated.
This decision typically turns on a small number of concrete considerations.
- How people will be engaged: Whether the company needs to employ people directly through its own local company, or whether it can operate without incorporation at this stage while still engaging people compliantly in the market.
2. What the business needs to do locally: Whether the local team will simply deliver internal work or support existing customers, or whether it needs to sign contracts, generate revenue, invoice locally, or take on broader operational responsibility.
3. What level of commitment is acceptable at this stage: the practical implications of each option in terms of setup time, internal effort, governance, and local administration, including capitalisation requirements, ongoing compliance obligations, and the need to appoint local directors or representatives who may carry statutory duties and personal liability under local law. This also includes the ability to change course if the market develops differently than expected, or if the business decides not to proceed beyond an initial hiring phase.
4. How difficult it will be to step back: The legal, financial, and operational effort required to reduce headcount, suspend operations, or exit the market entirely. In many jurisdictions, winding down an entity is neither quick nor simple: liquidation can take years, require continued local filings and representation, trigger audits or inspections, and involve employee termination obligations that persist well beyond the end of commercial activity. These factors materially affect how reversible an early expansion decision really is and should be assessed before a permanent local presence is established.
Outcome of this phase
By the end of this phase, the company has decided whether each shortlisted market will be entered through its own legal entity or through a non-incorporated model such as a Global Employer of Record.
That decision determines whether the business can hire immediately, what types of roles can be placed locally, who carries legal and administrative responsibility, and how easily the setup can be changed or unwound if plans shift. Only within those constraints does it make sense to decide how people will be hired and employed in the next phase.
Phase 3: Determine the Talent Engagement Model
Once the form of presence is set, the discussion shifts from markets and footprint to people..
They are deciding who they actually want working there, what those people will do day to day, and what that implies legally and operationally.
This phase is about translating business needs into roles that can be placed in a specific country without creating avoidable exposure.
In practice, the questions tend to be very concrete.
- What kind of people are we hiring? Are these long-term team members embedded in the organisation, or specialists delivering a defined scope of work? Will they follow internal priorities, report into managers, and operate as part of core teams? The answers determine whether contractor engagement is even possible under local rules, or whether employment is unavoidable regardless of commercial preference.
2. Where will these people be based? Are the roles intended for local hires, or do they depend on relocating existing staff or attracting foreign talent for new roles? This affects not only immigration feasibility and timelines, but also cost, dependency risk, and how quickly teams can be launched in a foreign market.
3. How senior and influential are these roles? Some roles go beyond execution and sit close to management, commercial decision-making, or revenue generation. Positions that approve pricing, negotiate or sign contracts, manage key client relationships, or direct local teams can materially affect where a company is considered to be operating from a tax and regulatory perspective. Placing these roles in a new country may create management and control exposure or contribute to permanent establishment risk, particularly when authority is exercised locally rather than through a foreign entity. These implications need to be assessed before hiring decisions are made, not after roles are already embedded.
How must these roles be engaged in a new country?
Whether a role can be engaged as a contractor or requires employment depends far less on contract wording than on how the work will actually be performed. If individuals are expected to follow internal priorities, report into managers, work ongoing hours, use company systems, and operate as part of core teams, many jurisdictions will treat the role as employment regardless of how it is labelled.
This assessment is highly country-specific. Some jurisdictions apply strict tests around subordination, economic dependence, and integration into the organisation, and actively reclassify contractors where those criteria are met. Others focus on exclusivity, duration, or the client’s degree of control.
Understanding how these rules are applied in practice is critical, as employee misclassification can trigger retroactive tax, social security, and labour law exposure for both the company and the individual.
The outcome of this phase is a clear determination, role by role and country by country, of whether individuals can be engaged as contractors or must be employed, and what level of compliance, tax, and regulatory exposure each option carries. Only once these boundaries are defined does it make sense to proceed to recruitment and employment execution.
Phase 4: Talent Acquisition
Once markets, footprint, and hiring models are defined, recruitment can begin in a focused and controlled way. At this stage, the questions are no longer strategic or legal, but operational: which roles to hire first, where to find the right people, and how to sequence hiring in line with business priorities and delivery capacity.
The purpose of this phase is to translate expansion plans into an initial hiring wave that is realistic for each market and consistent with the constraints already set in earlier phases.
Key considerations in this phase include:
- Role prioritisation: Which positions need to be established first in each market, and which can follow later. This often depends on whether the immediate objective is to support existing customers, build delivery capability, test commercial demand, or establish a local commercial presence.
2, Talent sourcing: Where suitable candidates are most likely to be found in each country, and whether hiring will rely on local recruitment partners, existing networks, or internal referrals. Market maturity, competition for talent, and expected time-to-hire are factored in at this stage.
3. Local versus relocated hires: Whether roles are intended for local candidates or require relocation of foreign nationals, and how this affects hiring timelines, cost, and feasibility. Where relocation is involved, immigration requirements and practical constraints are identified early to avoid delays later.
4. Candidate alignment with the role: Beyond skills and experience, attention is paid to how candidates are likely to operate in the role as defined: level of autonomy, reporting expectations, collaboration with global teams, and fit with the organisation’s working model.
Where required, we support clients with recruitment in the selected markets. Together with the leadership team, we define the first key positions, clarify responsibilities, and agree on hiring priorities. We then work with local recruiters and trusted partners to identify suitable candidates, while clients remain directly involved in the key interview stages and final hiring decisions.
The outcome of this phase is a clearly defined first hiring wave for each selected market, with prioritised roles, realistic timelines, and shortlisted candidates aligned with both business objectives and the employment parameters already established. Only then does it make sense to move into formal employment and onboarding.
Phase 5: Employment and Onboarding
In practice, companies rarely experience international expansion as a single, end-to-end process. More often, the sequence is fragmented. A market is approved, recruiters are engaged, candidates are shortlisted, and only then does the question arise of how those people can be employed legally and compliantly.
By the time this question surfaces, there is usually pressure to move quickly. The role is defined, the candidate is available, and business teams want to proceed. At this point, employment is no longer a strategic discussion but an immediate operational requirement.
This is where earlier decisions about footprint and hiring models become concrete. The company must determine who will act as the legal employer in each country, how employment contracts will be issued, how payroll and statutory obligations will be handled, and who carries ongoing responsibility under local law.
Where a local entity has not been established, this role is typically fulfilled through a Global Employer of Record (EOR).
In simple terms, an Employer of Record is the local legal employer. Employment contracts are issued by the EOR in line with local labour law, while individuals work day-to-day for the client organisation, as part of its teams and on its projects.
At this stage, employment moves into execution. This includes:
- acting as the legal employer for international hires in each jurisdiction;
- drafting, issuing, and maintaining locally compliant employment contracts aligned with applicable labour law;
- managing payroll and statutory obligations, including salaries, taxes, social security contributions, and mandatory employee benefits;
- handling employment administration such as onboarding, contractual changes, probation periods, leave management, offboarding, and terminations in line with local requirements;
- coordinating these processes centrally to provide visibility across the global workforce and associated legal, HR, and payroll obligations.
The result is that companies can employ people in new markets without setting up local legal entities, while ensuring individuals are properly employed under local law and statutory requirements are met.
Closing
Approached this way, international expansion stops being a series of disconnected decisions and becomes a controlled sequence of commitments.
Leadership teams gain a clear, comparable view of markets based on how employment actually works on the ground: cost, labour law, regulatory exposure, and enforcement reality. This makes it possible to choose where to expand, how much presence to establish, and which roles belong in which markets before obligations begin to accumulate.
Just as importantly, employment decisions are taken with a full understanding of their consequences. Contract terms, termination exposure, intellectual property ownership and protection, social security and benefit obligations, data protection requirements, and tax risk are considered upfront, not discovered once teams are already in place.
The result is practical control over international expansion: the ability to expand internationally, hire the right people, and compliantly operate across jurisdictions with clarity about responsibility, cost, and risk.