The many challenges of corporate scaling

Expanding a business comes with its own growing pains, writes Rick Hammell, CEO of Elements Global Services.
By: | October 11, 2018


While Singapore boasts a low unemployment rate, its workforce is limited. The resident labour force is numbered at 2.2 million by the Ministry of Manpower and the unemployment rate is 2.1%. As more startups and companies move into Singapore, there simply won’t be enough local workers to fulfill the job demand.

About the Author
Rick Hammell is the CEO of Elements Global Services.

Already, new graduates are struggling to find full-time employment – not unlike their peers in the US, UK, and South Korea – and certain industries are struggling to find employees with the skills and experience they require.

This workforce gap is exacerbated by the number of citizens who are expatriating to attend university and find work in their chosen fields – six out of every 100 Singaporeans have moved elsewhere. This figure may seem low, but when compared to other nations like Australia and Japan, whose figures are three in 100 and less than one in 100, respectively, it becomes clear that Singaporeans are more inclined to move abroad.

Until Singapore’s talent and skills gap adjusts, the local workforce is likely to find itself at an impasse that requires companies to either recruit team members from outside of Singapore or outsource their work.


The challenges of expansion

Considering Singapore’s limited workforce and the rapid globalisation of work thanks to technological advancements and companies embracing flexible working arrangements, some companies may think the solution to their staffing needs is to expand into a new market with a larger talent pool.

This sounds like a wise move in theory, but in reality, expansion is a process that requires a mountain of paperwork, an extremely large financial investment and countless hours of research and preparation in order set up for success.

Don’t discount the research portion of the expansion process – you need to know the new market inside and out, including the competition, the demographics, the culture and the audience behaviours.

If you rush into a new market blindly without taking the time to truly get to know it and consider if your company will be successful there, you may find yourself in the same kind of situation that Uber found themselves in when they expanded into Southeast Asia.

After the famed industry disruptor’s  initial success in the United States, the company quickly moved  into Southeast Asia, setting up offices, hiring employees and recruiting drivers without adequately considering  their local competition and the behaviours of their audience.

Though they worked to disrupt and penetrate the markets in ASEAN, they were ultimately unable to succeed due to the competitive landscape, and eventually merged with homegrown company Grab.

Another cautionary tale is bicycle-sharing company oBike. The concept seemed promising: users download an app and use it to rent bicycles that are stationed around the country as and when they need them, paying a small rental fee via the app.

After quickly setting up operations in Singapore and expanding into over 20 countries, oBike suddenly faced a problem that it helped create in Singapore and Melbourne: regulations introduced by governments to curb bicycles being parked in random locations.

The new regulations required licensing that would limit the number of bicycles in operation and enforce geo-tagging and fines for users who did not park their bikes in authorised areas.

Though oBike still operates in many of the markets it expanded to, it has ceased operations in Singapore and Melbourne because it decided complying with regulations  would be too expensive.

These two examples show that rapid expansion after an initial splash can be disastrous – though both companies are still operating in other markets, had they considered all the aspects of their business model and the locations they were moving into, they could have avoided these issues.


Expanding your business with a partner

Keeping these examples in mind and considering the hiring landscape of Singapore, when it comes time for your company to grow, it’s possible that it will be difficult for you to find the right new hires or to manage an expansion abroad that adequately meets the local requirements.

Depending on your needs, leveraging the capabilities of a human resource service provider that can act as the employer of record (EOR) might provide to be the cheaper and more efficient option.

An EOR, in short, is an entity that can act on your behalf to expand, on-board, manage and pay employees in a country where a company doesn’t have a registered entity.

This means they assume responsibilities as the legal employer, while the business still retains full autonomy over who they hire (and fire), compensation culture, benefits, and total control of their own products and services.

It’s  a solution that can save you time and money, and allows you to on-board new staff quickly.