Many smaller businesses expanding internationally may be overlooking employee benefits, as 50 per cent lack a competitive package, according to new research from Howden Employee Benefits.
The research, conducted by Beauhurst, found that 234,000 UK businesses now operate across 128 countries, with SMEs accounting for 84% of companies with overseas operations.
It found that technology start-ups are helping drive the trend, with around 24,700 multinational businesses less than five years old, including more than 3,000 digital and technology companies and 565 AI firms operating internationally.
Meanwhile, Europe remains the most popular destination for UK firms expanding overseas, with almost 85,000 operations across the region. But other markets are growing with more than 17,000 UK businesses now operating in Asia and almost 9,000 in the Pacific region.
According to the research, expanding overseas can create challenges for smaller firms around managing employees, compliance and local regulations across different countries.
Howden says many businesses continue to underestimate the importance of employee benefits when expanding internationally even though there’s intense competition for talent particularly in the technology and artificial intelligence sector. The report notes that such firms can face difficulties balancing local regulatory requirements with the need to attract and retain employees in highly competitive labour markets.
Howden Employee Benefits Global Employee Benefits Services managing director Mark Ramsook says: “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.
“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.”