Business-minded technologists have always planned for global business empires. It used to take decades before they could grow globally.
Today, it can be more or less instantaneous – creating a new set of opportunities and threats. Digital platforms allow companies to build and scale using teams based anywhere in the world. As a result tech companies are going global from day one.
A new wave of support services is also helping tech firms expand across borders. For example in order to manage the complexity of operating across borders, tech companies are increasingly outsourcing back office functions such as tax, compliance, legal, and HR. Tech companies can simply 'switch-on' a back-office team as they enter new jurisdictions.
One reason that tech companies are so keen to grow globally is through fear of coming second. One of the most important considerations is the platform the tech company is using. As product and internet services companies expand, they face different adoption models and associated R&D investing decisions.
It may be easier to go global than before, but significant social, legal and organisational barriers remain. To tackle these issues many companies look to hire a strong country manager on the ground. But while they may understand the target market, they are often new to the business – or even the industry. Companies that want global consistency must balance local and company knowledge, either ensuring there's enough rotation or coupling with headquarters.
Tech companies need to structure themselves to meet new and traditional challenges, There are four broad approaches to any market; establishing local offices; finding local partners; creating a virtual presence; and merging or acquiring local businesses. Each involves a balance of control, local market risk and margin protection and inevitably many take a blended approach, utilising different structures in different markets.
