Global Gotchas

How to avoid hidden traps in international laws.

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4. Documentation

Linguistics is hardly the only thing that can trip up IT leaders buying globally. Different standards in documenting deals can also be problematic.

U.S. managers are accustomed to keeping information about software licenses, contracts and proofs of purchase. Managers elsewhere aren't used to such data retention practices.

One of Blakeslee's clients discovered that foreign IT managers weren't documenting software purchases, which is necessary information for audits and to minimize the chances of buying pirated products.

"It's not just the audit issue," Blakeslee adds. "What if you get into a dispute with the vendor? What about contract negotiations? You need to know what the baseline is."

Without that paper trail, you're lost.

5. Taxes

"IT tends to buy a lot of goods and services, so taxes can be an issue for them," says Robert Zahler, a Washington-based partner at international law firm Pillsbury Winthrop Shaw Pittman LLP. That's because sales taxes and value-added taxes are addressed at the local level, even though such purchases could be deployed on a global scale.

CIOs can minimize taxes, though, by knowing when purchases can be charged to U.S. headquarters, Zahler says. Consulting services and software used companywide could be bought by the U.S. headquarters even if they are being used at European sites. However, a system bought and used exclusively in Munich, for example, would be subject to local taxes.

"You need to get legal advice in each specific situation," Zahler says.

6. Legal Systems

Experts say that as outsourcing work to India and developing countries has gained ground in recent years, CIOs have begun to learn a valuable lesson about worldwide legal systems: They aren't equal.

"Many IT executives aren't focused on the issue of what legal remedies are available to them," says Alan N. Sutin, chairman of the national technology, media and telecommunications practice at Greenberg Traurig LLP in New York.

And that's a problem when companies want to prosecute a worker for, say, stealing proprietary code or trade secrets. The legal remedies often aren't available because laws dealing with technology-related crimes in many countries aren't as evolved as they are in the U.S. and Europe, Sutin says.

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