The Startup CEO's Guide to Global Expansion 2025

Part 2: Finding the right mode of global expansion

In the first part, we discussed how successful global expansion means a fundamental change of mindset.

Specifically, it means making the switch from seeing global expansion as something that's fundamentally complex, and seeing it as something that's fundamentally simple.

But changing your mindset is only one part of the equation. Once you've decided to seize the opportunity of growing your startup globally, you need to decide on your method of expansion.

Welcome to Part 2.

Finding the right method of expansion

Choosing the right expansion model is a critical decision that directly impacts your startup's market accessibility and overall success in new geographies.?

Each mode of expansion comes with its own set of advantages, challenges, and implications for your ability to navigate local complexities and scale effectively.

For instance, engaging contractors can provide a quick and flexible way to enter a new market, but it also comes with risks around misclassification and intellectual property protection that could limit your long-term growth potential.?

On the other hand, setting up a foreign subsidiary gives you the most control over your local operations but also involves significant upfront investment and regulatory compliance burdens.

There are four primary pathways to consider: engaging contractors, partnering with local firms, using an Employer of Record (EOR), or establishing foreign subsidiaries.

Contractors

Hiring contractors can provide a flexible, cost-effective way to tap into global talent pools without the commitment of permanent employment.?

This model offers speed, agility, and potential cost savings, making it attractive for early-stage startups or short-term projects.

However, misclassification of contractors is a serious compliance risk that can result in legal penalties, back taxes, and reputational damage.?

Partnerships and reselling?

Forming strategic partnerships or reseller agreements with established players in your target markets can accelerate your international expansion by leveraging their local knowledge, networks, and customer base.?

This model allows you to piggyback on a partner's brand equity and infrastructure, reducing your upfront investment and risk exposure.

However, partnerships also mean shared control and revenue.?

Carefully vet potential partners for alignment on vision, values, and objectives. Clearly define roles, responsibilities, and performance metrics in contracts. Protect your intellectual property and maintain visibility into sales and marketing activities.

Establishing foreign subsidiaries?

For startups with a long-term commitment to key markets, establishing wholly owned subsidiaries provides the greatest control and stability.?

As the legal employer, you can hire directly, protect your IP, and build your local brand presence.

However, setting up foreign entities is a complex, costly, and time-consuming process that requires navigating local legal and regulatory requirements.?

You'll be fully responsible for compliance with labour laws, tax codes, and reporting obligations.?

This model is best suited for more mature startups with validated product-market fit and steady revenue streams.

Employer of Record (EOR)?

An EOR is a third-party organisation that serves as the legal employer of your international workforce, handling payroll, taxes, benefits, and compliance on your behalf.?

This model offers a middle ground between contractors and subsidiaries, allowing you to quickly hire local talent without setting up a legal entity.

EORs are well-suited for startups looking to test a market before committing to a long-term presence, or those lacking the resources to navigate complex local employment regulations.?

However, EORs also insert an intermediary between you and your team, which can create challenges around communication, culture, and intellectual property.?

That’s why it’s so vital to choose the right Employer of Record partner when you’re scaling.?

Let’s think about the example of a US startup expanding into Europe.?

A US company that’s considering using an EOR for the first time may not be aware that:?

• Different markets in Europe have different attitudes and laws towards EOR.
• Different EOR solutions have different attitudes towards compliance.

What’s more, it’s natural to assume that, when you’re using an EOR to expand internationally, the EOR is taking on all of the risk.?

Whichever expansion model you use to expand, it’s going to have a knock-on effect on how you build your global workforce.?

First and foremost, it’s going to affect how & where you decide to source global talent.

We'll discuss this in part 3.

This article was adapted?from the longer version?of ‘The Startup CEO’s Guide to Global Expansion’, which you can read on the Omnipresent website.

Simplify your global employment

For growing companies who need to employ globally,?Omnipresent is the only Employer of Record that’s embedded into your business, letting you build your global team your way.

Omnipresent removes the need for foreign entities as you scale your global business, enabling you to:

• Simplify every aspect of managing an international workforce.
• Build your global team in days, not months .
• One low flat rate. No matter who, no matter where.