Over the past several years, the global workforce landscape has changed permanently. According to estimates, 52% of the US workforce prefers a hybrid model as of 2026, almost double the number of remote workers prior to COVID-19. Companies that successfully expand their businesses internationally using virtual teams will be in a strong position for ongoing global growth as the economy continues to become more distributed.
There are three primary strategic benefits that aspiring businesses can realize through global expansion with virtual teams:
- Greater access to diverse talent pools
- Economic benefits from optimizing both international markets and local markets
- Promote continuity of business operations by enabling work to be done around the world in a 24-hour cycle
According to research conducted by Deloitte, companies with ethnically diverse employees are 33% more likely to be outperformers compared to their local competitors. What's more, teams that are dispersed across multiple countries promote a "follow-the-sun" workflow, where a project can be completed regardless of where employees are located, delivering significant efficiencies.
Below are seven steps to effectively develop an international business strategy:
1. Establish a Remote Work Philosophy and Assess Readiness
Prioritizing remote work before going global means organizations must first decide where they stand on remote work and how supportive they are. Leadership teams need to determine whether they generally encourage remote work, allow remote work for certain positions, or limit remote work depending on the needs of the operation. The philosophy regarding remote work will ultimately guide a company's hiring practices, investment in infrastructure, and development of corporate culture.
A readiness assessment may help identify the primary goals of the organization (e.g, cost savings, gaining access to specialized talent, or entering new target markets) as well as define which positions can be completed in a virtual space while maintaining high quality and compliance. Typically, positions that require direct interaction with customers, those that include creative components, and those that have a large technical component can all be performed in a remote capacity.
Companies such as GitLab and Zapier that have achieved successful global expansion operate under a remote-first model, building relationships on two important principles, namely, openness and comprehensive documentation. When companies establish an asynchronous communication system, they promote accessibility and collaboration for all employees, anywhere and anytime.
2. Choose an Ideal Global Employment Model
The second step is to select the model that makes sense for international hiring. This decision is critical because it can have direct implications for three things: speed to market, cost, and operational control.
Employer of Record (EOR)
An Employer of Record, like RemoFirst, is the business entity that assumes all employer responsibilities in the host country (jurisdiction), including payroll, tax withholding, benefits administration, and regulatory compliance, while the client must manage the employees' day-to-day work.
Through EOR services, companies can employ individuals in new countries within a few days without needing to establish their own entity. This employment model is best for companies looking to explore a foreign market or having a small number of employees. These services help businesses maintain compliance worldwide while reducing legal and administrative burdens associated with hiring employees from countries around the world.
Professional Employer Organization (PEO)
A PEO is typically focused on HR functions and administration using a co-employment arrangement, which shares responsibility for human resource-related issues (e.g., employment law, payroll, etc.) between a client company and its service provider (PEO). The most frequently differentiated feature between an EOR and a PEO is that PEOs typically require companies to have an existing legal entity in the host country; therefore, the PEO model is most useful for established companies that are seeking to streamline their domestic market HR operations.
Local Legal Entity
Establishing a subsidiary corporation (local legal entity) provides companies with total control and ownership over the business in the host country; therefore, this employment model is most effective for companies that have a long-term commitment to operate in a host country and employ a significant number of employees (usually 50 or more) per country.
The cost to set up a subsidiary corporation in a host country can be between $50,000 and $200,000, and it can take three months to one year to establish a legal entity in a host country. Many companies begin with EOR services to validate diverse market demand before converting to local legal entities when their employee base is large enough to justify the costs of establishing a local legal entity.
3. Understanding Regional Talent Nuances and Vetting
Organizations that understand the nuances of regional talent will align their hiring strategies with the needs of the organization's business.
Regional Talent Mapping
Latin America (LATAM) has many benefits to U.S companies due to overlapping work hours and high proficiency in English by workers in this region. Latino professionals typically work within 1-4 hours of U.S. time zones, allowing for real-time collaboration.
Eastern Europe has become known for an abundance of technical skill, especially in AI, blockchain development, and advanced engineering. Because of the time zone difference from Eastern Europe to U.S. facilities, there will be 7-10 hours of difference, requiring more asynchronous workflows.
In addition, the Asia Pacific (APAC) regions offer lower-cost talent who have specialized skills in software development, customer support, and business process functions. However, there will be a time difference of 9-13 hours from the U.S., which presents challenges for synchronous work to be completed.
Vetting Remote Candidates
To intelligently hire remote workers, both technical capability and remote work competency must be evaluated. To build effective remote teams, intentional evaluations should be conducted.
Assessment of a candidate’s skills should use paid test projects. Candidates should be assigned tasks that mimic their future real job responsibilities, and skills will be demonstrated through technical proficiency, quality of communication, and style of working.
When evaluating for remote work readiness, candidates should be assessed on self-motivation, time management, clarity of written communication, and proactive problem-solving. Structure the behavioral interview to highlight how candidates have handled challenges associated with remote work while still being productive in a remote work environment.
4. Create a Global Compensation and Payroll Strategy
One of the most complex considerations in planning for international expansion is compensation philosophy for global team members.
Compensation Models
Geographical compensation adjusts salaries according to the local cost of living and market competition. Companies such as Buffer and GitLab utilize geographical compensation as a mechanism to maintain a competitive edge while controlling costs. The geographic compensation model allows for intraregional arbitrage but may impede transparency when employees seek compensation comparison from one region to another.
Value-based compensation is a single standard of pay for the same job regardless of the location of the employee. For instance, Basecamp uses value-based compensation as a method for promoting equality among employees and for simplifying compensation decisions. The value-based compensation model removes the conversation regarding geographical compensation; however, increased costs will occur with this model in lower-cost regions.
Managing Global Payroll
Most organizations have invested in technology to facilitate the ability for their organizations to have remote employees. Centralized payroll processing and administration (conducted by digital payroll platforms) will simplify the management of payroll while ensuring compliance with regulations in multiple countries.
Platforms that handle payroll processing and administration for multiple countries provide centralized payroll processing for employers and will include the following functionality: automated currency conversion, automated withholding of taxes, and reporting for statutory purposes.
Benefits Administration
Benefits vary greatly by country, and many countries legally mandate certain benefits, such as payment of a 13-month salary (13th month salary) or minimum vacation. Organizations must design their employee benefit offerings in compliance with local employment laws while maintaining consistency with their core benefit offerings, such as providing funds to their employees for professional development or to purchase home office equipment.
5. Mitigating Regulatory, Tax, and Intellectual Property Risks
There are many legal and tax-related facets to consider when expanding overseas that can cause a significant amount of liability if done improperly .
Permanent Establishment (PE) Risk
Permanent establishment occurs when a company unintentionally creates a taxable presence in a foreign country. Tax authorities are likely to determine whether or not your company has an established PE by using employee home offices on a continuous basis to conduct company business and/or through dependent agents who have the authority to enter into contracts on your behalf.
A way to reduce this risk will include placing limits on an employee's ability to bind the company to a contract, as well as tracking the number of days employees spend in different jurisdictions. Using specialized global employment platforms offers organizations the opportunity to address PE risk through maintaining proper legal separation.
Intellectual Property (IP) Protection
Copyright ownership defaults vastly differ from country to country. Organizations should provide comprehensive IP assignment clauses in all employment contracts that can comply with the law in each jurisdiction. Exit procedures should include specific steps to ensure the company retrieves all company data and verifies that former employees have returned all proprietary information.
Data Protection
Data privacy laws like GDPR require companies to maintain specific compliance with respect to how they collect, handle, and store personal information. Technical efforts include ensuring that any data in transit or at rest is encrypted, that access controls are in place, and that there is regular auditing of security processes.
6. Create IT Logistics and Infrastructure
The overall success of supporting a distributed team will depend largely on the planning related to the hardware provisioning, security management, and the logistics (lifecycle) of the asset.
Managing the Device Lifecycle
Zero-Touch (no-touch) Deployment allows IT to send employees globally preconfigured equipment. Equipment is sent with all operating systems and security settings installed. A company such as Firstbase or Workwize, which specializes in global IT asset management, can assist with customs documentation and will have experience with all the nuances associated with international shipping.
Asset Retrieval (Offboarding) and Security
When offboarding remote employees, organizations face the challenge of retrieving company equipment securely and ensuring that the data on the device is wiped according to NIST standards.
Shipping Complexities
The regulations for international shipping can be very complicated when it comes to technology hardware. For example, lithium battery restrictions and import duties can add 25% to 100% of the value of the device in countries like India and Brazil. Organizations must utilize a logistics provider that specializes in the regulations.
7. Build a Culture of Communication and Performance
A culture of communication and performance management in your organization creates the environment for your distributed team to succeed or fail.
Communication Architecture
Distributed teams across multiple time zones must use asynchronous-first communication as the default method of communication. Documentation is the primary means for sharing information and for making decisions. This requires discipline; however, it also leads to a reduction in meeting fatigue for remote workers, thereby increasing their productivity.
Nearly 61% of employees working from home report being more productive than when they worked in an office environment.
Video conferencing as a method for communicating synchronously should be reserved for complex problem-solving and for establishing relationships. Mandatory meetings must occur during reasonable working hours using the time zone as a guide.
Performance Metrics
In a distributed environment, relying on "time-based" performance metrics fails to measure the effectiveness of a distributed team. Organizations must focus on delivery predictability, delivering quality outputs, effective communication, and asynchronous collaboration as their measures of performance.
Creating Trust and Connection
Intentional methods must be used to create opportunities for team members to build connections with each other. Structured informal meetings such as "Virtual Coffee Chats" and "Social Channels" provide team members with opportunities to establish relationships. Annual and/or biannual in-person "retreats" provide team members with concentrated opportunities to develop relationships.
Creating an environment of trust can occur when team members cannot be in close proximity to one another. To create a culture of trust, organizations should have a policy of open information access for all employees. Organizations should also use strong remote hiring practices to ensure that they hire employees who are a good cultural fit from the beginning.
Conclusion
The key to developing a successful international expansion strategy is to have a well-documented plan that incorporates the legal, operational, technical, and cultural nuances necessary for your company's success.
If you choose a model for employing your employees, gain insight into regional labour markets, create fair compensation, take measures to minimize the risk of non-compliance, develop sound IT logistics, and create an effective communication plan, you will greatly enhance your opportunities for long-term international growth.
The direction in which the future of work is headed is that companies are becoming increasingly favouring distributed models. Technologies are becoming available that will enable companies to connect with employees from anywhere in the world, thereby eliminating many of the barriers to working together globally.
However, the human aspects of trust, culture, communication, and performance management will continue to be important to the success of teams that not only work together on a regular basis across borders but also excel at doing so.
