How to bring a digital product to foreign markets: five steps on the example of Dubai

The capacity of the corporate market in Russia has noticeably decreased. Startups selling digital solutions in the B2B segment should take a closer look at foreign countries. How to start scaling your business abroad, says Dmitry Makhlin, HRlink Development Director.

At the beginning of April 2023, about 500 foreign companies closed their branches or suspended their activities in Russia. Many Russian enterprises are freezing or postponing investments in new projects, including the digitalization of various business processes. About a quarter of companies that were at different levels of our sales funnel put negotiations on pause.

In order to maintain the company's growth rate, we have decided to compensate for a possible decline in revenue in new markets. Now we are exploring the possibilities of the UAE and the countries of the Middle East, we are considering Africa and India for expansion. I will share the algorithm for a Russian company that has its own IT product to go abroad.

Step 1. Choose a direction

Today is not the best time to enter the US or European markets. Therefore, it is worth paying attention to the countries of the Middle East, Asia and Africa.

On the one hand, in most cases, emerging markets are smaller in terms of money and less advanced in digital development. On the other hand, this is their attraction — many niches in the field of IT products can be free or low-competitive, and the solutions already presented — noticeably weaker than yours.

When choosing countries for deeper research, there are several factors to consider:

• Potential market size and dynamics. An indirect indicator can be the state of the economy as a whole (GDP) and how it grows, stagnates or falls. In the B2B segment, a significant indicator is the number of large and medium-sized companies — potential customers.
• Economy stability. Are there any geopolitical risks or internal factors that could change the business situation in the country? Reports and ratings of international organizations and consulting companies help to understand this (UN statistics, reviews of the OECD, the International Monetary Fund and the World Bank, ratings of Standard & Poor’s, Moody’s Agency, Fitch Agency, research by IDC, McKinsey, Gartner, PwC) .
• Complexity and cost of starting a business. It is important to find out how easy it is to register a legal entity and open an account, to calculate the tax burden. Information about government support for the industry or business digitalization projects may be useful.
• Peculiarities of staying in the country. Do I need a visa and what kind, how quickly and conveniently is it obtained.
• Legislation in the selected segment. As a rule, the depth of adaptation of the product to the new market depends on this. For example, personnel laws are important for us: features of employment, personnel workflow, regulatory framework for e-document flow.
• And most importantly: whether companies have a problem that your product solves. You can draw a conclusion at the level of a hypothesis based on the study of the previous points, but it must be confirmed in the following steps. li>

We have chosen three areas for research — Arab Emirates, Africa and India. We did not consider the CIS countries and Turkey because of the unpredictability — the rules of the game in these countries can change at any time. China is too specific in terms of business development, to work in this country you need a strong partner with its own customer base.

Dubai — it is a world business center, there are representative offices of most international companies. The UAE market itself is interesting, as well as its close relationship with Saudi Arabia — one of the fastest growing economies in the region. Dubai — it is a kind of hub for development in the Middle East.

India — the seventh largest economy in the world. There is no such language barrier as in China, due to the prevalence of English. And the mentality is historically closer to the European one.

Africa — the most promising market in general: a large population, widespread use of smartphones, a high need for automation of various processes.

Step 2. Looking for contacts

We are moving from desk analysis to full-fledged Customer Development (needs identification through interviews). The task of this stage — talk to potential clients. During the conversation, you need to find out if there is a need for the product and what causes it. It is important to feel the "pain" companies and see if they are willing to pay for their solution. If there is no — it is pointless to waste time on further steps.

We need people from among potential customers in the selected country who are ready to communicate. Finding such contacts is not easy. You will have to use any connections: ask friends and acquaintances, contact partners and existing clients (if the level of relations allows), place requests on social networks. This is how we found the first ten respondents from Dubai who agreed to talk with us.

Another way to — search for counterparties in the social network LinkedIn. We acted through communities of entrepreneurs. Several people managed to find it.

Step 3. Negotiating

Before negotiations, I recommend translating the product into English so that you can demonstrate its capabilities. The conversation should be extremely substantive.

Keep in mind the key goal — find out if there is pain and whether companies are ready to pay for its solution, — but let's build a broader conversation. It is important to learn about the peculiarities of doing business in the country firsthand — it's hard to get it from research or market reviews.

What kind of information is learned in person? For example, during the first interviews, we found out that in the UAE all transactions are concluded with the help of intermediaries, who are called introducers. These are people who specialize in introducing potential partners to each other: you must be introduced by someone worthy of trust.

We also learned that there are areas in Dubai that have different rules and laws. You need to carefully consider this in order to avoid violations. And the most difficult thing for new companies — open a bank account, the process can take up to 4 months.

In Dubai, labor is quite cheap. Salaries are high, but there are no payroll taxes (social contributions, etc.), and as a result, it turns out to be quite profitable for employers. Therefore, it is easier for them to pay people for routine processes than to implement automation. For us, this is a minus.

There are many IT solutions from India on the market, and, according to our interlocutors, their quality leaves much to be desired. It's cheap, but users have a lot of questions about the functionality and performance of systems.

If we talk about our — HR Tech, — then in the UAE, the penetration of automation in HR is significantly lower compared to Russia, and HR specialists are less savvy in these matters.

At the same time, there is a huge flow of expats in the country (there are nine foreigners per Dubai), who come to work for 2-3 years. In companies, there is a constant turnover and, accordingly, a large amount of workflow. For us, this is a fairly free and promising market — our product is needed just for personnel electronic document management. But in the UAE, the recruitment process is not as complex as ours: fewer documents and steps are required, which reduces the need for automation.

Step 4. Launching ads and collecting leads

In parallel with the negotiations, it is worth making a landing page in English and placing it on a foreign hosting. Now there are problems with paying for hosting, so at first glance, a simple task also turns into an extraordinary one. We are looking into using cryptocurrencies to solve this problem.

The landing page needs to be promoted. We settled on search promotion in Google. It works the same way as in Russia: we analyze popular requests and search results, and target ads on them. Incoming requests — these are already leads who need to try to sell the product. But, in fact, this is still a stage of studying the market and business needs. Therefore, we are negotiating in the same vein as in the previous step.

Step 5. Enter the market and start selling

If there is pain and companies are willing to pay for it, — can enter the national market. There are two expansion options — opening your own representative office or cooperation with a local partner. One does not exclude the other. In any case, you first need to explore the market yourself and personally verify its prospects, and then decide which model of presence will be the main one.

When creating a representative office, you need to register a legal entity and open an account. One of the most challenging — creation of a sales department. But if the processes are properly built in the parent company, then the representative office should not have problems with this.

The main secret is that the procedures are prescribed and regulated, and that the employees have all the materials and tools for negotiating — up to scripts of conversation with the client.

Promising business model for an IT startup — work with consulting companies and integrators: they can offer a solution within the framework of cooperation on larger projects. Therefore, it is worth including international and local outsourcing companies in the sales funnel.

At this stage, it is necessary to refine the product so that it matches the realities of the selected country.

As a rule, work goes in two directions. First — adaptation to local legislation, procedures adopted in the country and peculiarities of business processes in companies. The second — elaboration of integrations, because other basic systems are used in foreign countries (ERP, CRM, etc.). The information necessary for the formulation of technical specifications for developers is collected at the Customer Development stage.

Time calls

The first country a product enters can be the starting point for further business scaling — to neighboring countries and regions. For example, a company from Dubai today has more chances for positive promotion abroad than a startup from Russia.

To be able to develop in other markets, businesses will have to adapt not only to the economic characteristics of the country, but also to political realities. It remains to be hoped that these are temporary difficulties, and a good product will be able to find its consumer in any corner of the world.