Martijn Tel is chief financial officer at SiriusDecisions, a research and advisory company that helps B2B organizations grow intelligently. Prior to joining SiriusDecisions, he held financial leadership positions at McGraw-Hill Education, Archipelago Learning (now Edmentum) and Reed Elsevier.
Martijn has deep experience managing international expansion and operations with his current and prior employers. Our managing editor talked to him about some of the reasons why SiriusDecisions expanded into the APAC region and about some of the benefits of using an experienced third-party to facilitate global payroll, accounting, HR and other services.
I understand SiriusDecisions decided to expand into another country to better serve your customers. Could you outline the situation, including the process you used for vetting and approving the expansion?
Our customers are global companies, and they told us they needed us to serve them in APAC. We initially accommodated them by flying back and forth to the region, but it soon became apparent we needed to follow them, or at least seriously look into the prospect of opening an APAC office.
We began with the APAC expansion’s economic potential. I should add here that this wasn’t our first expansion — we’d had existing activities in the UK for years. We knew from that experience that our global business model worked and that our software IP was capable of serving clients around the world.
That positive UK experience, along with our APAC-related research and requests from our customers, made the decision to expand into Asia relatively straightforward.
How did you settle on an APAC target country?
After an initial round of vetting we narrowed down our targets to Australia and Singapore, in part because of our customer base. Singapore eventually emerged as the clear winner for a number of reasons. To start with, it’s compact and gives us the ability to serve a large number of local customers. In addition, it’s in the middle of the APAC basin and is well-known as an excellent place to establish a hub to serve clients and to market to prospects across the region. It also has a favorable tax climate and always seems to be at or near the top of the World Bank’s ease of doing business rankings.
Finally, Singapore’s workforce is highly appealing. As in Australia, there are no language barriers in Singapore for English speakers. Furthermore, local workers are not only educated, they’re used to working with European and US companies. For Singaporeans, it’s not a big deal to get on a video conference at midnight local time. This is a personal bias or simply based on my own observations, but asking for that kind of availability in Australia can be on balance a little more challenging. The bottom line is that in my current role with SiriusDecisions, and in some of my former roles, I’ve had great experiences with Singapore-based staff.
Could you describe some of the formal aspects of SiriusDecisions’ due-diligence process?
To start with, we made sure that the critical stakeholders and subject-matter experts were involved, from finance to legal. I’m in finance and took the lead on the Singapore expansion, but I partnered with one of our HR leaders. It’s essential to include all interested parties, not only for communication but also to minimize the risk that certain obligations or considerations will fall through the cracks.
Obtaining accurate budgets during the planning stage is also critical. When we looked at the cost of setting up APAC operations, Radius was instrumental in providing us with sound cost estimates based on their long experience. Budget items included potential expat costs, the cost of renting office space, of fulfilling employer and tax obligations and more.
This is the fourth time I’ve expanded to Singapore with an employer, so I knew what questions needed to be asked. If you don’t have that kind of experience, a third party expert like Radius is even more critical to understanding your options and what you’re getting into. My ultimate recommendation to expand to Singapore had to be approved by our board, so I needed a sound rationale and to get the budget right, and Radius was very helpful for that.
Are there any other points you think might be helpful for organizations considering expanding internationally?
I’ll start with a little context. At SiriusDecisoins, finance works out of our headquarters in the US, and we do all our IT and invoicing from here for our global operations. Given that most software is cloud-based now, most companies will find they can duplicate this model if they want to.
When we expanded to Singapore, we used a law firm to establish our local legal entity. When it came to everything else, we decided to keep our operations as simple as possible, which is where Radius came in.
Our Singapore operations are essentially a cost center for us. Radius handles our Singapore payroll and accounting. My thinking is: Why do those things yourself when operating abroad? A third party knows local GAAP, and we don’t have the scale to justify the hiring of a full-time employee knowledgeable in local GAAP, it’s too expensive. It’s more efficient and cost-effective for Radius to take care of that. They also deliver our financials translated into US GAAP and handle our GST [indirect tax] filings in Singapore.
The second area where Radius helps is the HR side. Every country has its own payroll withholding obligations, immigration requirements for expats and the like, and we don’t want to hire in-house experts for those. Again, it makes sense to hire an experienced third-party to manage those obligations. Not only does it save you employee costs, it also saves you the considerable burden of keeping up with local labor and immigration laws.
It’s a little like having your cake and eating it too: You have the operations abroad, and you’re comfortable that the foreign accounting, HR and taxes are being managed right. You’re also getting accounting translated to US GAAP, so consolidated reporting is seamless. If you don’t use a third party, you’ll create a lot of inefficiencies and risk-making mistakes.
I’ve found that you can make international expansion as hard or as easy as you want. Basically, when expanding, you want to use your strengths and also use the strengths of trusted, experienced third parties. If you think about expansion like this — very practically from the outset — then planning and implementation can be a gratifying experience.
For us in the finance department, expanding to Singapore was almost a non-event, which is of course how you want it to be. I’m confident our HR team would say much the same thing. We did what we do well, and Radius handled everything else.
How are your Singapore operations going? Are you pleased with the decision to expand there?
Things are going extremely well and we’re very happy about the decision. SiriusDecisions has a positive corporate culture, and there’s ample dialogue between our Singapore office and HQ. We’re actually hosting a big customer event in Singapore soon, which will further amplify the importance of our operations there.
That reminds me of another positive aspect of using Radius: If your expansion doesn’t go as planned, you can always cut the cord and your wind-down costs will be minimized. If you build a complete target-country infrastructure to handle back-office functions by hiring your own employees, by contrast, you’re in a much riskier situation. If things go the other way, and you’re highly successful in the target country, it may make sense to bring some or all of the back-office functions in-house at some point. That’s a big consideration for growth companies.
For SiriusDecisions, Radius continues to be a great partner, and we’re very pleased with their help. It really does feel like a partnership.
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