SMEs going international face workforce and benefits challenges
Despite uncertainties around international trade, a growing number of small and mid-sized enterprises are going international. A new study from Howden and Beauhurst has found that this has been driven by the AI boom – with more than 500 UK start-ups focused on the technology moving abroad.
For the longest time, global expansion has been represented as the preserve of the business elite. But increasingly, it is not just the FTSE 100 giants who are weighing up overseas markets as a means to unlock new growth. With new trade fronts opening up around the world – including India – British based SMEs are looking to go global faster than ever before. As a result, around 84% of the 234,000 UK companies now operating overseas are SMEs.
According to a new study co-authored by Howden and Beauhurst, this has also been powered by a boom in technological demand. Since the explosion of excitement around AI in late 2022, more than 560 “next-gen UK AI start-ups” have expanded abroad, by the researchers’ reckoning. At the same time, currently more than 24,000 of the UK companies trading abroad are fewer than five years old – suggesting they have been able to expedite their scaling with technology.
Even so, managing a global workforce poses a severe operational hurdle for small and medium-sized firms. For all the digital tools at the disposal of SMEs, a company with 50 employees scaling across multiple borders cannot manage complex legal and regulatory obligations in the way a traditional multinational does.
Benefits
Mark Ramsook, managing director for global employee benefits services, at Howden Employee Benefits, commented, “To win the international talent war, emerging multinationals need enterprise-grade benefit structures built for lean teams. Many are scaling without a cross-border partner to bridge that gap. For UK firms operating overseas, benefit design, financing models and benchmarking are essential components. They let agile tech and AI businesses offer consistent, compliant and competitive packages to small, distributed teams, without the administrative burden a traditional enterprise carries.”
The issue is that many SMEs tend to neglect establishing a competitive employee benefits package – with 50% of multinational businesses not having one in place. This can be vital in building culture and attracting and retaining talent in a competitive marketplace, meaning they will struggle to obtaining the human expertise they still need to thrive.
To help businesses manage this transition, Howden Employee Benefits has developed the Multinational Guide. Howden works with growing and mid-sized multinationals - businesses that are often too complex for a local broker to coordinate effectively, but that aren’t the right fit for consultancies working with very large corporations.
Ramsook concluded, “For inbound firms, the challenge is translation: converting expectations like US-style 401(k) and healthcare into local UK equivalents such as private medical insurance, auto-enrolment pensions and life assurance, so they can attract and retain local talent from day one. As the line between local start-ups and global enterprises blurs, a compliant, localised and competitive benefits proposition is no longer optional. It is increasingly what separates businesses that scale internationally from those that stall.”
