Covid19 has really had a huge impact on the lives of each and everyone. So many things have changed since the start of the year 2020 and so have changed the office frameworks. Covid19 has pushed companies around the world out of their physical offices into the digital realm and remote working has become more prevalent than ever.

Globalization continues to reshape the business world, offering both exciting opportunities and significant challenges. In 2024, companies are navigating an increasingly interconnected global marketplace, balancing the benefits of expanded reach with the complexities of diverse regulations and competition.

In this blog, we will explore the key benefits and challenges of globalization in 2024. We’ll delve into how globalization influences business growth, HR management, the opportunities it presents, and the obstacles it poses. Additionally, we’ll discuss the meaning and importance of globalization in today’s interconnected world.

What Is Globalization?

In simple terms, globalization means developing an international presence or scaling a business to an international level. In other words, the process of globalization facilitates a seamless flow of information, technology, and other resources among different countries.

The effects of globalization are quite evident on an everyday basis. Companies are expanding overseas and capitalizing on opportunities in the global marketplace through strategic global expansion plans to gain competitive advantages.

Read more: Global benefits Strategy

Why Is Globalization Important?

Globalization has changed the very nature of economic activities among different countries by allowing trade expansions, opening supply chains globally, and providing access to resources and foreign labor markets. 

One of the most positive effects of globalization is that it has reducedgeographical barriers. As a result, we can see a huge cultural exchange of ideas among nations. For example, with the benefits of globalization, big brands like McDonald’s are now accessible in Vietnam, India, and other countries. Similarly, Americans can now enjoy Indian meals right in New York. 

Also, it is one of the  effects of globalization that businesses can now manufacture products at low costs in other countries (like China) and sell them at high prices with increased profit margins. 

So, considering the impact of globalization, we can say that it has made the world smaller. You can reach out to businesses and buy from them in no time. More people are coming together with globalization for competitive goals. 

What are the benefits of globalization for businesses?

If you think about who benefits from globalization, then know that both employees, employers, and the industry, as a whole, benefit from globalization. Take a look at the various benefits of globalization for employees, employers, and the industry. 

1. Employee Benefit

Traditional work structures have existed for centuries, and the disruption caused by the pandemic has provided a unique opportunity to pause and assess. While the standard office environment may be ideal for some people, in practice, remote working has raised some legitimate questions. Before the worldwide lockdown, the employees adapted to the framework conditions set by the employers. This often meant a stressful daily commute, uniform with work-ready clothing and forced productivity in an environment that may not be ideal for each employee's individual needs.

An unexpected development of remote work is a new focus on the needs of employees as individuals. Lockdown rules and government security guidelines have resulted in employers being required to adjust to the other responsibilities and obligations in the lives of their employees, such as: childcare and homeschooling obligations. This increased flexibility is one of the benefits of globalization for employees and it has changed conventions so that work is now adapted to fit well according to the conditions around the individual.

This adaptation has benefited people in many ways. If someone can organize their workday according to their lifestyle and needs, they will be more efficient and productive. We are all different, some of us are more effective in the morning, while others at night. Some people like to work in peace, others prefer to work while listening to their favourite music. Working from home means spending more time with loved ones, which increases well-being. More flexibility has led to mental health benefits such as the freedom to walk, get a power nap, put on some comfortable clothing, and work with an anxiety-relieving pet. Work is now measured by the quality of the work done rather than the time spent at the desk.

Along with work flexibility, another positive of globalization is that it promotes employee development. The cross-cultural exchange of ideas, music, language, etc. among employees helps them build stronger empathy and respect for other cultures worldwide. Additionally, employees can share skills, resources, and technology to achieve one common goal.  

2. Benefits for Employers and Industry

A recent survey found that between 70 to 80% of workers who currently work remotely in Latin America would prefer to continue doing it once the pandemic is no longer a threat. This is a significant number, which means that employers must re-evaluate work structures to avoid the brain drain in search of positions that offer the flexibility and autonomy they have experienced during that time.

Flexible and hybrid remote structures emerged as a positive effect of globalization. It not only benefits employees but employers as well. Office real estate is a costly expense that comes with the added cost of insurance and employee safety. Reducing or eliminating the physical office would reduce annual expenses. The introduction of a distributed team structure also expands the pool of locally available talent recruiting to industry specialists from around the world.

The globalization of the workforce means an increase in innovation and development, as education, experience and the specialties of a variety of influences are ingrained in corporate culture and practices. Global market prices can also be cheaper for the hiring company, helping to democratize wages in countries and level economic inequalities.

One of the benefits of globalization for employers is that they get access to new market opportunities that enable them to scale their businesses. With globalization, companies can reach new customers and develop diverse revenue streams. So, if you are a business looking for innovative and flexible ways to expand, globalization definitely has several benefits for you.  

3. Globalization 4.0

Historically, the term “globalization” summarizes the international trade of goods, but thanks to technological advances, it is now also possible to export services. In the past, developments in transportation and manufacturing have disrupted globalization, and now remote working is the next big change with the potential to affect the global economy.

Services constitute almost 63% of the chunk of the global economy and remote digital roles are the means to export that experience. Previously, international recruitment included people who immigrated to another country on work visas. This practice created inequalities in world economies, as the best-educated and skilled professionals from emerging markets often sought employment abroad to advance their careers. But now, as a benefit of globalization, developed nations can hire from the global talent pool. Thus, they can not only appreciate the skills of foreign workers individuals but also their tax income and financial contributions to commerce, the local real estate market, etc. Exporting skills can change this system in a positive way.

International remote work democratizes the opportunities that allow people around the world to find work at fair market prices without uprooting their lives. This is why globalization is good. For emerging economies, this means foreign income contributing to the local economy and skilled workers gaining experience that could carry over to local entrepreneurship and innovation in the future. 

Skills export will encourage developing country governments to continue investing in education and the technological infrastructure necessary for constant connectivity. These developments will balance access to high-paying jobs, quality education, and the Internet with the standardization of these opportunities worldwide.

Globalization helped companies adapt to the work-from-home model in the past few years. This experiment of remote work has shown the world some positive results and a huge potential for constructive change on a global scale. If adjustment is possible under the pressures of a global pandemic, it will certainly be a viable option once the threat has passed.  

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What are the challenges of globalization for businesses?

As we said, globalization has advantages and disadvantages. Here are a few challenges that businesses face as effects of globalization. 

1. Hiring

International recruitment is one of the most critical challenges of global HR in the context of globalization. Recruiting people beyond the border creates unfamiliar territory for the HR teams. Also, they must thoroughly scan candidates, understand the compensation dynamics and manage other aspects like cultural differences, time zones, and language barriers. 

2. Payroll and compliance

Managing payroll and legal compliance is one of the most crucial challenges of globalization. Maintaining compliance with the ever-changing employment and tax laws requires a lot of research, planning, finances, and other resources. Businesses should choose PEO vs. EOR services to overcome this challenge.

3. Labor Exploitation

A major downside of globalization is exploiting foreign workers. Several companies opt for cheap labor to survive in the competitive landscape. However, in the process, they exploit workers in countries like China and Malaysia, where labor costs are low and the tax regulations make it easier for companies to exploit labor.

Read more: Global Outsourcing

How does Globalization Affect Businesses?

There are both pros and cons of globalization on businesses. So, it wouldn’t be correct to say that businesses only experience the positives of globalization.

Here are a few effects of globalization on business. 

1. Increased competition

With great opportunities, globalization brings competition too. It is obvious that businesses face stiff competition in the global market from companies worldwide. Consumers have an array of brands to choose from in the global market. As a result, companies must keep building cutting-edge products and services to survive in the market.

2. Knowledge and technology sharing

One of the advantages of globalization is that it allows sharing of knowledge and technical resources. It has become easier for companies with similar technological requirements to cooperate and make quick technological advances. 

Similarly, globalization promotes a rapid transfer of knowledge. Companies can cooperate to build products through easy knowledge sharing. 

3. Diverse workforce

Diversity in the workforce is one of the consequences of globalization. Though it might be challenging to manage a diverse workforce, businesses can significantly benefit from it. With globalization, businesses can access a larger talent pool. They are more likely to attract employees from countries where they want to maintain a presence. Also, a diverse workforce can help businesses understand new markets and get fresh perspectives and ideas on business operations.  

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In a Nutshell

To take advantage of remote work, organizations must re-evaluate their practices and redesign processes to support distributed teams. The company's existing benefits and perks may no longer be suitable for people who work from home in various locations around the world. The onboarding processes for new hires need to be reconsidered and international labor laws researched thoroughly.

If you are finding it difficult to navigate compliance in a foreign country, Gloroots’ EOR can help. With a SaaS-based EOR solution and on-ground global experts, we can help you employ talent in over 180+ countries without the hassles of local labor laws, employee benefits, and payroll. As remote work has paved way for more integration among globally distributed teams, take advantage of the benefits of a globalized workforce by using an EOR solution 

The fusion of culture in the workplace is a benefit of globalization and will create unity at a time when backlash against immigration and racial prejudice has increased in countries such as the United Kingdom and the United States. Establishing these foundations could mean easing immigration policy in the future, as a large international workforce will have acquired the desirable experience and skills for visa sponsorship.