What Every CIO Should Know about Expanding Business to Europe
For any company looking to service customers in another location, or trying to win new business in a different geography, opening an international office is a question that quickly comes to the fore. Setting up a beach head in a foreign location comes with many challenges–navigating regulatory red tape, staffing, legal issues, etc–that can set a company back months when getting to market quickly and growing the business is the only thing the CEO can think about. Ensuring the right communications, IT and infrastructure operations are in place to support this growth falls to the CIO, and is also a big part of how successful the expansion will be.
The key differentiator for successful international expansions, is the ability to scale quickly, with the right talent, in a supportive business environment
Europe is the natural jumping off point for a lot of US based companies that want to go global. A large, mature market such as this can’t be ignored by an emerging company looking to grow market share. If companies don’t grab that opportunity, there is often a competitor who is ready to grow the idea and get in ahead of them. But, Europe is also a highly complex environment with multiple different languages, cultures, legal and regulatory systems, as well as infrastructure standards and communications networks. So the choice of where to locate and how to go about this is crucial.
Top 5 Tips to Making a Successful Start
• Plan Ahead: Go in with your eyes open. All European countries are not the same when it comes to setting up an operation, so educate yourself on the locations in which you’re going to do business. We recommend working with local recruitment and IT partners, as well as hiring sharp people in the right places.
• Read the Small Print: Make sure you have the full picture on labor laws, salaries, lead times, and social add-on costs which can vary significantly across Europe. Many locations also offer attractive incentives, tax advantages, and access to EU research funding which can offset the cost and disruption of initial scale up.
• Move Quickly: Ease of doing business and the speed of ramp up are really going to reduce the risk profile that you have in setting up an international operation. How easily and quickly can you get the right team in place or get the office up and running? The ability to plug in easily to communications and IT will be key, so ensure the right hosting, connectivity and infrastructure services are on hand locally.
• Keep it Simple: Many companies grow so quickly that before they know it they’ve got a very complex structure with many different offices all over Europe, all with their own legal structures, management teams, and infrastructure requirements. This can be very difficult to run and costly to maintain. For younger companies or startups, the more functions you can run from one key location, the better.
• Look at the Track Record: A location that has a strong cluster of large technology, data centre, and digital operations will most likely have the skills, infrastructure, and legal and regulatory systems already in place that you’ll need to plug into. Availability of hosting and cloud infrastructure across multiple vendors, as well as strong know-how in cybersecurity are some of the key signs that you’ll be in safe hands.
What are the Big Challenges?
• Skills and Talent Retention remains a key issue for CIO’s globally. An overseas operation offers a great chance to access great new talent if you get it right. To run an international team you’ll need an international workforce. The ability to hire skilled technology talent from all around Europe and farther afield will be crucial. The landscape in terms of education, mobility and immigration, as well as diversity is important, especially for growing Tech and IT teams. Labor laws for hiring contractors can also be complex in some markets. Experienced first management hires are crucial in getting the processes in place, hiring teams, and solving those initial teething problems. Also, don’t underestimate the soft factors: things like English language, cultural fit and work ethic, as well as productivity levels.
• Data Privacy is one of the most crucial issues for US companies who handle European customer data. With 28 different countries in the EU, navigating the complex regulatory landscape in Europe is a challenge. A new European General Data Protection Regulation (GDPR) will come into force from May 2018. This will mean uniformity of law for data protection across all EU member states. It should give greater clarity for both citizens and business, and allows for engagement with one lead regulator in Europe. It’s important that companies have the right mechanisms and structures in place, as not adhering to the law could mean substantial fines. Choosing a location with experience in dealing with data-rich companies, along with a firm yet clear regulatory approach, will save a lot of issues down the line.
• Brexit makes the environment in Europe a lot more complex, and has added a lot of uncertainty in areas like EU market access, mobility, and accessing regulatory bodies. Post Brexit, Ireland will be the only English speaking country in the EU with free movement of labor and barrier free access to EU market of 500m consumers, and gateway to the markets of the Middle East and Africa.
My Top Advice
Working with IDA Ireland has given me many years of seeing success and failure first hand when a company sets up overseas. Our advice to companies is to have a clear corporate strategy, and plan and prep well ahead of making the jump. Talk to your peers and other companies about their experiences and challenges. And remember that it’s always good to have a partner, such as IDA Ireland, who can smooth the way through all the legal hurdles and red tape.
The key differentiator for successful international expansions, is the ability to scale quickly, with the right talent, in a supportive business environment which is culturally aligned to the US. Choosing a location with a track record of running global technology operations, with few barriers to entry and sophisticated infrastructure allows a company entering the European market to get up and running very quickly, without losing valuable management and financial resources to bureaucracy. This means you can focus on serving your customers in Europe, and winning new ones, from Day One!