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One of the best ways to understand whether and how to enter a new market is to test it out first. Setting up a new legal entity and hiring local teams is needed for running full-scale operations but it doesn’t have to be the first step of entering a new market – that’s where staff augmentation comes in.
In this article, we will show you how to use staff augmentation for expanding to new markets faster and with lower costs.
Understanding staff augmentation
What is staff augmentation
Staff augmentation is a form of outsourcing where a company contracts an outside team to deliver a project. Unlike managed services where the professional service firm is contracted for a specific outcome, staff augmentation is usually agreed upon in the amount of time the team works for the company.
Essentially this means you will have a temporary in-house team without the bureaucracy that comes from hiring employees. And your hiring is not limited to the countries where you have a legal entity.
Staff augmentation for entering new markets
Staff augmentation is commonly used in the IT sector to contract a team for a project that requires a skill set that the company doesn’t possess. However, it can also be an effective way to test new markets.
For example, let’s say a pharmaceutical company wants to know whether their products have a business potential in Southeast Asia. Two common ways to do it would be to conduct market research and send senior executives to meet with potential buyers.
With staff augmentation, the company can take a step further by having a dedicated team of sales representatives from a medical background working for the company for 6-18 months. The local team knows the market and the buyers will be more confident to buy because they see the seller has a local presence.
If you want to hire long-term employees, then the employer of record is a better alternative.
Foreign direct investment is a commitment that should be made once you have at least some level of market intelligence. So how do you find out whether your products or services have a potential in the market you are considering?
Once you already have the confidence that the market is attractive enough for you then it’s time to set up a legal entity.
Enter new markets faster
Setting up a company, acquiring work permits and licenses may take months or even longer in emerging markets such as Indonesia, the Philippines or Vietnam.
While it should not be seen as a limitation but rather as an opportunity to enter markets with less competition with staff augmentation you can already get started before you complete all the legal requirements. And then once your company is registered you can either transfer the outsourced staff to your own payroll or continue using the service provider.
Focus on building a business instead of managing local bureaucracy
When entering new markets you will also face new legal environments with their own regulations and written and unwritten norms.
Staff augmentation eliminates the need to understand local employment laws since you don’t hire employees directly. This allows you to focus on your core business while the bureaucracy is handled for you.
Decide on the market you want to test
Emerhub provides staff augmentation in the Philippines, Indonesia, and Vietnam. Additionally to the geographical location, you should also decide the scope of your project. Staff augmentation is most effective for specific assignments.
Hiring a team
Unlike traditional staff augmentation firms, Emerhub does not specialize in a specific industry. We assemble teams based on the needs of the client, such as:
- Procurement experts
- Technical sales
- Software developers
- Marketing support
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