UK SMEs lead surge in multinational expansion as AI firms go global

Small and medium-sized businesses are increasingly driving international growth, with new research revealing that 234,000 UK companies now operate across borders in 128 countries, led by a new generation of technology and AI-focused firms.

The study, commissioned by Howden Employee Benefits and conducted by Beauhurst, found that 84% of UK businesses with multinational operations are SMEs, highlighting a significant shift in the profile of companies expanding internationally.

Traditionally associated with large multinational corporations, global expansion is now being fuelled by younger, more agile businesses that are entering overseas markets much earlier in their development.

According to the research, there are currently 24,700 UK companies with multinational operations that are less than five years old. More than 3,000 of these operate in the digital and technology sector, including 565 specialist AI businesses with an international presence.

Digital and technology companies account for the largest share of UK businesses expanding overseas, with 25,600 firms operating internationally. Professional and business services follow with 22,000 multinational businesses, ahead of creative industries (21,100), application software (19,100) and manufacturing (17,400).

Other sectors showing strong international activity include online retailing (16,500 companies), automotive businesses (14,800), distribution and wholesale (12,600), clothing (11,100) and parts and components manufacturing (8,400).

Europe remains by far the most popular destination for UK companies establishing overseas operations. The research found that UK businesses maintain 84,800 operations across Europe, almost five times the volume recorded in the next largest region.

However, expansion into other global markets is gathering pace. More than 17,000 UK businesses now operate in Asia, while almost 9,000 have established a presence across the Pacific region.

At the same time, the UK continues to attract significant international investment and business activity, with 115,000 overseas companies now operating within the UK market.

Despite the growing ease of international expansion, the report highlights workforce management, employee benefits and regulatory compliance as key challenges for scaling businesses.

Many fast-growing firms are establishing remote teams across Europe, North America and other regions but lack the infrastructure and expertise traditionally associated with larger multinational organisations. According to data from REBA, half of multinational businesses do not have a competitive employee benefits package in place.

Howden warns that this can create significant challenges in attracting and retaining talent, particularly in highly competitive sectors such as technology and artificial intelligence.

“To win the international talent war, emerging multinationals need enterprise-grade benefit structures built for lean teams. Many are scaling without a cross-border partner to bridge that gap.

“For UK firms operating overseas, benefit design, financing models and benchmarking are essential components. They let agile tech and AI businesses offer consistent, compliant and competitive packages to small, distributed teams, without the administrative burden a traditional enterprise carries.

“For inbound firms, the challenge is translation: converting expectations like US-style 401(k) and healthcare into local UK equivalents such as private medical insurance, auto-enrolment pensions and life assurance, so they can attract and retain local talent from day one.”

He added: “As the line between local start-ups and global enterprises blurs, a compliant, localised and competitive benefits proposition is no longer optional. It is increasingly what separates businesses that scale internationally from those that stall.”