Tech companies need to understand how talent development fits with overall M&A strategies.
Key takeaways
Assessing tax and compliance implications of a workforce spread across multiple countries is key.
Businesses also need to understand the nuanced dynamics of new and emerging markets.
Technology companies have greater access than ever to global talent pools, given the rise of remote work over the past five years. But a clear recruitment and retention strategy is still foundational to achieving lasting success with a global workforce. While many industries have tapped into remote worker opportunities, the technology sector continues to reap outsized benefits from this flexibility.
Beyond the basics of diversifying recruitment channels, offering competitive compensation packages and using advanced technologies to manage candidate applications, tech companies need to understand how talent development fits with overall M&A strategies, assess the tax and compliance implications of having a workforce spread across multiple countries and understand the dynamics of new and emerging markets.
Prioritizing these and other considerations highlighted below can help technology companies build a sustainable global workforce that can grow and adapt with the business.
1. Labor costs and market dynamics
Regions outside of North America often offer talented workforces at lower wage rates, making them attractive destinations for technology firms seeking to optimize margins and control overhead. However, the cost of living in these markets can vary significantly, influencing salary expectations, benefits packages and long-term employee retention. Organizations need to take a holistic view of a market’s typical compensation structures and costs of living alongside labor costs.
High market turnover in some regions—driven by fierce competition, skill shortages or shifting economic conditions—can also disrupt continuity and require ongoing investment in recruitment and training. This volatility means that understanding local market dynamics is essential to maintaining a stable and productive workforce. The better an organization understands a specific market, the better equipped it will be to fully realize the benefits of its investments in employee training.
Acquisition strategies add another layer of complexity to labor cost considerations. This unpredictability demands a flexible strategy that accounts for immediate integration needs and longer-term talent development.
2. Global workforce strategy compatibility with M&A strategies
For technology companies pursuing M&A strategies on a global scale, aligning workforce strategies with overall M&A objectives is crucial for seamless integration and sustained growth. The UK, for instance, has recently emerged as a hotbed for acquisitions, prompting many firms to rethink how their talent strategies support market entry and expansion—though higher tax rates there add another factor to consider.
When a company acquires another in a new region—such as setting up a sales office in Europe, the Middle East or Africa to capitalize on increased global client demand—it must consider how local workforce practices, labor regulations and cultural expectations intersect with the broader corporate strategy. Beyond simply relocating or onboarding employees, establishing a physical presence may require adapting recruitment, onboarding and talent retention strategies to align with local market dynamics and client needs.
Operationally, funding and financial considerations are equally integral to the success of global M&A and workforce strategies. Entities established overseas—whether for a sales office or as part of an acquisition—may require careful planning around self-funding, cash repatriation and tax exposure. Repatriating cash from acquired entities, for example, can trigger increased taxes or result in trapped cash that affects liquidity, operational agility and even exit strategies down the line.
Confirming compatibility between workforce integration and transaction advisory means understanding not only employment laws but also the financial mechanisms governing cross-border operations. This includes evaluating whether funding models for new entities are sustainable, anticipating the impact of local regulations on capital movement, and preparing for the possibility that operational assets may be subject to restrictions during future divestitures or exits.
3. Regulatory and tax implications
Navigating country-specific regulatory and tax implications of operating in new locations is paramount for any business expanding globally. Hiring remote talent in Germany or France, for instance, means compliance with robust worker protections, mandated insurance coverage, and strict rules about working hours and termination procedures. In the Asia-Pacific region, rapidly evolving regulations might affect intellectual property, local data residency rules and the ability to contract freelancers. Failing to comply with these requirements can expose companies to substantial fines, litigation and reputational harm, making the engagement of local legal and HR experts not just recommended but essential.
Taxation presents another layer of complexity, as global operations can expose companies to a variety of direct and indirect taxes, such as corporate income tax, payroll tax and value-added tax. Companies must assess how entity structures—such as subsidiaries, branches or representative offices—affect tax liabilities and eligibility for incentives. Double taxation treaties, transfer pricing regulations and rules surrounding the repatriation of profits all play a role in shaping the financial ramifications of international growth. Without careful planning, issues like trapped cash or unexpected tax burdens can erode margins and hinder operational agility.
Companies should also understand and fully assess opportunities for R&D tax credits and how they differ from country to country. Doing so can help unlock more value when expanding into new markets.
International tax planning and global compliance strategies can help your business across markets.
4. Cybersecurity, GDPR and AI compliance
When technology companies expand internationally, safeguarding sensitive data becomes especially complex, demanding cybersecurity protocols tailored to each region’s regulatory landscape. In Europe, the General Data Protection Regulation requires organizations to implement stringent controls over how personal information is collected, processed and stored. Companies must ensure that their application systems are not only technically secure but also equipped with mechanisms for user consent, data minimization and transparency. This often means investing in advanced encryption, multifactor authentication and continuous monitoring tools to prevent unauthorized access or potential breaches.
With other important regulatory considerations such as the California Consumer Privacy Act, the EU AI Act and evolving piracy laws in the Asia-Pacific region, a flexible compliance framework is essential to meet local requirements without compromising global operations.
Successfully navigating cybersecurity, artificial intelligence and GDPR compliance also hinges on employee education and operational readiness. As global teams grow, companies must provide ongoing training on data protection practices, incident response protocols and the legal consequences of mishandling information.
5. Operational structure and employee relations
Tech companies have various options when it comes to structuring their operations in a new country. They can choose a co-employment model, leasing model or employer of record (EOR) model, each with its own set of benefits and challenges. The co-employment model allows the company to share employment responsibilities with a local partner, while the leasing model involves hiring employees through a third-party agency. The EOR model, on the other hand, enables a company to employ workers in a different country without establishing a legal entity there and may be useful for entities with a lower headcount. Larger organizations will likely need to assess whether their human capital management and payroll solutions are scalable in a way that can meet global business requirements.
Ensuring that the HR team is well-versed in the local employment laws and practices is critical. This includes understanding the nuances of employee relations, such as working hours, cultural norms and language considerations. A global handbook that outlines company policies and procedures in multiple languages can help maintain consistency and clarity across different regions.
6. Cultural fit and integration
Prioritizing and understanding employer-employee cultural fit is vital to building resilient, collaborative teams. Global leaders should go beyond surface-level diversity metrics and invest in local research to identify workplace values and practices that might differ from those in their home market. This nuanced approach enables organizations to tailor recruitment and onboarding processes, ensuring new hires not only possess the technical skills required but also share and enrich the company’s core values.
Cultural integration is an ongoing process that extends well beyond the initial stages of market entry. Fostering inclusion requires deliberate action, such as providing cultural sensitivity training, encouraging open dialogue across time zones and celebrating a range of traditions and holidays. Flexible work arrangements can help accommodate diverse lifestyles and family obligations, further deepening engagement and loyalty. Successful integration also relies on clarity: policies and expectations should be communicated transparently, ideally in multiple languages, so employees across all regions understand the company’s vision and the practical realities of day-to-day work.
The bottom line
Expanding into new markets presents plenty of challenges and opportunities for technology companies. Working with a third-party advisor can help leadership teams ensure they account for critical regulatory compliance considerations, take advantage of any available tax credits and incentives and build a workforce with staying power.
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