Staffing companies that expand internationally should be more patient in their demands for a return on their investment, according to Russell Clements, chief executive of international IT, science, engineering and technology recruiter SThree.

Clements told the Association of Professional Staffing Company (APSCo) executive conference in London earlier this month: “Don’t assume you will be an overnight sensation. Be more patient especially in emerging markets and allow the staff in that country to build the business in line with the business strategy.”

Clements, whose company has 36 overseas offices, said that companies needed to recognise that new offices abroad would initially have a negative impact on their profit and loss. “Most offices will be loss-making in the early days,” he said.

Clements added that accepting such losses in the short-term was easier for a private company than for a public company that had to satisfy the demands of external shareholders.

At the same time, Clements told delegates that staffing companies must be “prepared to pull the plug” when necessary. “Don’t sleepwalk to potential failure through pride or obligation,” he warned.

Clements referred to SThree’s closure of its Delhi office earlier this year to concentrate its efforts in the Mumbai market. “We gave them a chance to prove themselves, but we are not afraid to do it [close offices],” he said.

Clements said it was important to choose the right sectors: “Banking, pharma, oil & gas are good for international expansion because people in these industries move around the world.”

Clements said in retrospect, rather than wait 12 years, it would have been better for SThree to have “gone international” and to have diversified into other sectors such as oil & gas and mining sooner. SThree opened its first overseas office in Brussels in 1998. “Develop a five-year plan sooner, but it needs to be agile,” he said.

The following were other lessons learned:

Don’t have a UK-centric mentality. For example, commission based remuneration schemes on the UK model “may not float their boats”.

“Make fact-based decisions. Hubris is not a strategy.”

Spend time on cultural assimilation. One key member of staff in South America spent three months in SThree’s New York office getting to understand the business.

Don’t be embarrassed to learn from the competition. “If their guys have made a success of South America, why can’t we?” However, he added: “Don’t sleepwalk in other companies’ footsteps.”

Question the motivation behind why staff want to relocate. “Don’t assume staff wishing to relocate to Australia want to be the thrusting new kid on the block.”

Use your own staff rather than bring in staff from outside.