If there’s one thing we can count on in 2024, it will be the continuing onslaught of headlines sounding the alarm (or promise) of AI and machine learning as a potential disruptor in almost every industry—from banking and finance to healthcare. This begs the question: is global expansion also ripe for disruption by AI? In this blog, two HSP experts delve into what types of impact AI will likely have on companies looking into how (and where) to expand overseas.
Before we begin, let’s go into some important context. When we talk about global expansion, we’re dealing with lots of complexity—there’s no single scenario. We have companies that are simply exploring the idea of expanding overseas, companies that have aggressively embraced expansion as a means of growth, and those that are doing so because their overseas customers expect a presence in a particular country. And then there is another scenario—those companies that have attempted international expansion and failed. We see it all.
AI’s role in the “people” side of global expansion: It’s tricky
When discussing AI as a disruptive technology in the context of international expansion, there’s no single “right” answer. There is, however, a broad generalization that we can make. Simply put, AI may be positioned to have a huge impact in areas where we deal with numbers and data.
For example, while payroll systems are largely already automated, AI can go beyond traditional payroll software to deliver more sophisticated predictive and modeling analytics, from helping companies more accurately forecast staffing costs to helping them personalize benefits packages by examining employee data trends. In HR, AI has a huge potential to sift and analyze volumes of data to detect anomalies and employee fraud.
It’s when we get to the “people” side of global expansion, however, that AI’s promise becomes murkier and—arguably—more untenable. That’s what this blog is about.
The four phases of global expansion
Let’s think of global expansion as having four facets (with some overlap). First, there is the data and information-gathering phase. In this phase, a company is looking for information: How do things work? What are the laws and regulations? The second phase is about connecting the dots: You have a grasp of what you’re required to do on various fronts (for example, laws and requirements for taxes, payroll, and hiring in a particular country), and you now need to connect those disparate requirements to your company’s capacity, budget, timeline, and expansion strategy.
Third, you’ll face a “go/no go” phase—a decision-making point where you put everything together and make an informed decision about the feasibility of whether (and how) to expand overseas. The final (and arguably the most complex) phase is implementation, wherein you know what to do and how to do it, and now you’ve got to go do it. Let’s examine these phases through the lens of how AI is likely to be a disruptor.
AI’s role in information gathering for global expansion
In the first phase—fact-finding—there are various ways to collect information, and AI is certainly one of them. For companies that don’t have a global expansion partner that already knows the country-specific laws and requirements, the first step is typically an internet search. With some work, one can eventually find trusted sites that can provide somewhat reliable information. Here, AI can shine (in fact, we use it ourselves in this manner—though naturally, we validate everything personally).
Using AI to mine and summarize what’s on the internet can be very time-saving. There is, however, a limit. An expert already knows where to look for the most trusted sources of information. In addition to its unreliability, AI will crawl everything for an answer. That may speed up information gathering but will add the time-consuming task of validating the results. That’s why AI, for the time being at least, is best limited to broad generalizations. When researching country-specific laws and requirements, the stakes are too high to take an approach that isn’t 100% correct because the penalties for being out of compliance are too costly and damaging.
In addition, there’s the tricky fact that different countries, governments, and municipalities handle the online posting of information in different ways. What they post online may not be accurate or up-to-date. Only a human expert (often one with a physical presence in-country) can validate the accuracy of that information—AI will simply “trust” what it finds.
Can AI help connect the dots in a global expansion strategy?
You might be aware of the local laws and regulations for the different facets of your company’s global expansion, but how you connect the dots—apply that to your particular company’s operations and growth plan—is a different matter. You might need to hire three employees in Croatia, relocate several from the US, and perhaps need to import a product. Only a trusted global expansion expert can take the time to understand your company—your capacity, budget, timeline, and operations—to help you decide the pros and cons (including feasibility and costs) of different approaches. This multi-dimensional company-centered problem-solving approach is, at least for now, solidly within the purview of a human being well-versed in global expansion.
How can AI help your company make a go or no-go decision for expansion?
In this phase, you’ll put together everything you’ve learned and make one of the most critical decisions that will affect your company’s well-being: whether or not to expand. While AI can bring incredibly useful data to the process (from rich data analysis to trends and predictive modeling), at the end of the day, this is about your company’s ability to survive and thrive. That requires an expert who understands your company and prospective countries’ unique culture and business environment. AI cannot (yet) glean these “soft” insights. Only a human expert can take the time to thoroughly explain them to you. Let’s consider maternity leave. You might understand the employer options for providing maternity leave in a particular country, but you’ll also want to know what the practical implications are for your company and how to actually implement those policies. That’s not something that AI can do for you.
Can AI help your company implement its global expansion strategy?
Inevitably, a company will have a form to fill out in a country or locality that requires an in-person submission. For example, companies doing business in China require a literal stamp (called a “chop”) to represent their company. In China, company chops replace the signatures that we use in the US. Companies must stamp important documents in person. In Spain, workers must present biometrics to receive work authorization. While these are just a few examples, it’s obvious by now that for many of these processes to be fully automated (much less governed by AI), you’d need a sea change of modernization on the part of every country in which you are expanding. We just don’t see that happening.
“Never” may be too strong of a word, but it’s safe to assume that, for decades to come, a global expansion partner with a physical in-country presence will be the person best suited to help you navigate many of the logistics involved in this final leg of your expansion overseas.
Accountability and risk mitigation is the most important part of global expansion.
At the end of the day, understanding the implications of your decision to expand internationally can make or break your company’s ability to survive and remain competitive. The people accountable for making sound decisions critical to your survival, from the CHRO to the CFO, are unlikely to delegate critical decisions to anyone other than other experts—the tax attorneys, legal advisors, accountants, and others. While AI can help these experts make informed decisions, it is unlikely that in the near future (and beyond), we’ll be looking at significant disruption in the process of evaluating and implementing global expansion.
A global expansion expert with a tailored approach and real-world expertise will always deliver the right results for your company by blending real-world insight with deep technical expertise and a hands-on approach tailored to your company and the countries you’re expanding into.
The HSP high-touch, hands-on approach sets us apart and is a cornerstone of our personalized, bespoke solutions. Contact us today so that we can start delivering your custom solutions.