Israeli companies looking to go global fast without a lot of expense are starting to take advantage of SaaS-based global employment platforms, whereby workers are hired and on-boarded by someone else – but perform their duties like a regular team member.
“We become the employer,” explained Nick Adams, vice president of EMEA for G-P, the oldest and largest global SaaS employment platform. G-P was rated the No. 1 industry leader by NelsonHall in 2022 and an overall leader in the employee of record (EOR) solutions by Everest Group.
Adams was in Israel this week as part of his role to expand in the region. Already, G-P has worked with Israel’s Monday.com, Lightspin and many other local hi-tech companies.
“If you can imagine you are a Tel Aviv-based start-up and you received funding and want to expand internationally, the traditional route would mean setting up an entity in the country in which you want to expand that is locally compliant,” Adams explained. “It is dealing with employment contracts, payroll and a foreign tax system. It takes a long time and money. In places like Russia, Brazil and China, it can take years.”
Rapid growth
Today, companies want to grow quickly, he said. G-P has entities in 187 countries, so when that Tel Aviv company finds great workers almost anywhere in the world, it can work with G-P to hire them into its structure, pay them and ensure all tax matters are fully compliant. Then, G-P assigns the worker back to the customer. It charges a monthly fixed fee per employee.
Today, companies want to grow quickly, he said. G-P has entities in 187 countries, so when that Tel Aviv company finds great workers almost anywhere in the world, it can work with G-P to hire them into its structure, pay them and ensure all tax matters are fully compliant. Then, the G-P assigns the worker back to the customer. It charges a monthly fixed fee per employee.
G-P was founded in 2012. Adams joined in 2019 when it had 150 staff members and was valued at $500 million. Today, the company has 1,200 staff members and is valued at just under $5 billion.
“The model is now mainstream,” Adams said. “There are dozens and dozens of EOR providers all over the world. Most countries have local service providers, including Israel, but few can offer this globally. So Israeli companies tend to like our model.”
Online versus brick-and-mortar
THE PRIMARY catalyst behind the growth of companies like G-P was the COVID-19 pandemic. When the virus hit, most businesses had to change their working models dramatically, sending whole workforces home. While first, this posed a challenge, it was also an excellent opportunity for employers to hire staff wherever they were.
“Companies started to look for the best talent regardless of location,” Adams said. “Since COVID, companies have more trust in building a global, remote workforce.”
He said that at first, there was some fear that remote work would reduce productivity or that managers would struggle to ensure their staff was aligned with the company values. But the opposite has proven true. Adams said that studies show workers tend to invest more hours in their job, so much so that the newer challenge is ensuring these workers get up from their computers, take walks and maintain their mental and physical well-being.
At the same time, it saves companies money on traditional brick-and-mortar headquarters and builds company diversity, which separate studies have shown enhances organizational success. Finally, companies can pivot easily.
“If you try one country and it isn’t as successful as you hoped, it’s easier to walk away and find an opportunity in another country,” he said. “Companies become more agile and flexible.”
This does not mean that staff never gets together. Instead, companies are starting to take out small offices in coworking spaces, such as WeWork, or planning days a week or a month to bring everyone together.
“They come together as a team to brainstorm or bond socially,” Adams explained. “Creativity is often better in person.”
ACCORDING TO a Gallup poll published over the summer, 60% of American workers said they want a long-term hybrid work arrangement. Only 6% of 70 million employee respondents said they want to work entirely on-site going forward. More than 90% said they don’t want to return to the office full-time.
"Businesses that insist workers come back to the office will find they lose good talent to companies willing to be more flexible," Adams contended. "We are already seeing that in the US with companies like Google and Apple." He said G-P recently went fully remote.
Adams said Israeli companies are unique in that they tend to expand earlier in their lifetime than similar companies elsewhere.
“Young, successful companies get funding and want to enter several markets simultaneously,” he said, such as the US, United Kingdom and Australia. Since the signing of the Abraham Accords, he said he has also seen more demand for staff in the Gulf region.
Beyond that, he often directs companies looking to fill core roles in engineering, help desks or operations to other parts of the world – like Poland, the Czech Republic and other parts of Eastern Europe that offer large communities of skilled graduates at lower cost than the United Kingdom, Germany or France.
Companies can also look to Africa, where there are an increasing number of graduates to fill developer roles. In addition, the Americas have for the last few years provided talent pools of tech workers.
He said Israel is likely to experience muted growth over the next few years, with analysts predicting a 2.4% increase in GDP in 2023 and then 3.2% in 2024.
“Companies enjoyed significant growth through the end of 2021 – and then early in 2022 these companies overreacted with hiring and growth plans,” Adams said. “Later in the year, with the worsening of the economy and the capital drying up, we saw a correction. Now, growth will be somewhat slower, but we are still expecting share prices to rise and funding to become less restricted in the near future. IPOs will happen again.”
What’s next?
Adams believes that the future is for the “digital nomad,” where an individual can be fully mobile, travel around and work for different companies in different jurisdictions while remaining compliant. “We are waiting for legislation and technology changes to become fully available and global, but we are very excited about it.”