The growing work-from-home movement has given rise to a new type of worker: the digital nomad. Here’s your complete guide to digital nomads, including the pros and cons of hiring these professionals and steps to foster a successful working relationship.
The COVID-19 pandemic forced companies to embrace work from home (WFH) policies that kept employees healthy. As restrictions were lifted, many workers wanted to continue working not just from home, but from anywhere, including coffee shops and coworking spaces. Some went even farther afield, taking their work with them as they traveled across the country and the world. Those who prefer this model of working from everywhere have a name: digital nomads.
According to a 2021 research study conducted by independent professional engagement firm MBO Partners, 15.5 million American workers describe themselves as digital nomads. That figure represents an increase of 42% from 2020 and 112% from 2019. Here at BairesDev, we have firsthand knowledge of this trend. As a 100% remote company, we have seen an increase in the number of employees who take their work with them as they travel.
This trend represents more than an interesting HR fact or a logistical and technical challenge for employers. The existence of digital nomads can present legal, financial, and ethical issues for companies. The best way to avoid or address those issues is by understanding them. Given that the number of digital nomads is expected to increase, businesses should consider these considerations in advance.
Here we provide a complete guide to digital nomads, including pros and cons of hiring them, as well as things to consider and steps for success. But first, let’s take a closer look at who digital nomads are, how they operate, and what drives them to this lifestyle.
Digital Nomad Facts
According to the MBO Partners study, digital nomads are “people who choose to embrace a location-independent, technology-enabled lifestyle that allows them to travel and work remotely, anywhere in the Internet-connected world.” So, what else is known about this new kind of worker?
Age
According to the MBO Partners study, the majority (44%) of digital nomads are Millennials, followed by Gen X at 23%, Gen Z at 21%, and Baby Boomers at 12%. Before the pandemic, Baby Boomers made up a greater share of digital nomads, but this group became reluctant to travel during that time because they were at a greater risk of catching the virus due to their age.
Profession
The MBO Partners study reveals that digital nomads work in various fields, including IT, creative services, education, training, consulting, coaching, research, sales, marketing, PR, finance, and accounting. The study states, “The unifying theme of these professions is that they can be performed remotely using digital tools and the Internet.”
Digital Savvy
It’s no surprise that digital nomads have strong technical skills and are typically early technology adopters.
Locations
Digital nomads may work in locations within the U.S. According to the U.S. Chamber of Commerce. Popular cities include Boulder, Austin, Lake Tahoe, and Bozeman. The top countries to work in outside the U.S. are Canada, the U.K., Romania, Sweden, Denmark, France, the Netherlands, Australia, Switzerland, and Germany.
Motivation
A recent Forbes article states, “In recent years, there has been a shift from valuing possessions to focusing on experiences. Millennials, in particular, are fueling this trend. Rather than spend money on expensive watches or luxury cars, younger generations prefer to invest in experiences like concerts, rock climbing, and culinary classes.”
The digital nomad working style fits in well with this approach, allowing workers to explore culturally or geographically desirable locations without taking leaves of absence or introducing questionable gaps in their work histories.
Contributing Factors
Cultural and personal factors enable digital nomads to adopt a lifestyle that some would find disruptive and unnecessarily challenging.
Job Satisfaction
The MBO Partners study found that 85% of digital nomads are highly satisfied with their work and lifestyle, and 79% are satisfied or very satisfied with their income, with 44% saying they earn $75,000 per year or more.
The study states that digital nomads are “able to take advantage of what’s known as ‘geoarbitrage,’ or combining low-cost living with earning income at the wage rates of higher cost locations. This enables digital nomads to fund their travels and spend less time working to support themselves and more time enjoying their adventures.” For example, workers might choose to work from a lower-cost city like Bozeman for a company in San Francisco that pays higher wages than local firms.
Supportive Services
According to the Forbes article, more services are popping up to support digital nomads. They include coliving and coworking spaces, tour services, and online information and job sites. For example, the site Nomad List allows digital nomads to rate and exchange information about specific locations.
Employer Acceptance
The MBO Partners study states, “In the past, corporations have been hesitant to allow their employees to become nomadic. This has now changed, and a large and growing number of companies have announced plans to allow a much greater degree of long-term remote work.”
Changing Definitions of Work
An article on the website of the International Institute for Management Development (IMD) observes, “A generation of young workers exists who, having graduated at the time of the pandemic, started their working life having never set foot in an office.” For these young professionals, working remotely is not the “new normal” as it is for many others. It’s just normal.
Further, members of younger generations expect work to provide more than just a paycheck. The ability to mix professional and personal time has become more valued. In an employees market, the companies that make it possible are likelier to attract the best talent.
Pros and Cons of Nomadic Workers
Companies may find some challenges with hiring digital nomads, but generally, the advantages outweigh the disadvantages.
Pros
Global talent pool. In an employees job market, you may be having trouble attracting the right talent for your hiring needs. The reason could be there is a limited number of people in your area who have the qualifications you are looking for. Opening up the hiring process to candidates outside your local geographical area — or those who wish to travel outside it either temporarily or permanently — enables you to access a much larger talent pool.
Access to new ideas. A Harvard Business Review article states, “Short periods of co-location with geographically distant colleagues can help workers access information and resources that can help grow new ideas and projects, which benefits both the mobile worker and their organizations.” Such collaboration can also morph into opening new offices or creating permanent partnerships with foreign colleagues.
Soft skills. Digital nomads, by their very nature, are risk-takers who are willing to try new things. While too much of that quality could be destructive, a certain amount could benefit your company, especially if you want to innovate and stand out in the market. As a result of their adventures, these folks are also good problem-solvers, patient communicators, and adaptable in a wide range of situations and circumstances.
Boost to local economies. While some countries may resist an influx of digital nomads to their region, others actively try to attract it. According to the Harvard Business Review article, some countries, such as Portugal, are offering “a two-year renewable residence visa for workers who can provide that they have a remote job for the length of their stay.” The article notes that “these visas typically require proof of income and remote employment, travel insurance, and intent to depart.” The following video explains more about Portugal’s policy.
Digital nomads benefit the places they stay by contributing to the local economies without taking local jobs. Companies that can become known for having a positive impact on locations across the globe gain valuable reputational points in an era of consumer demand for ethics, accountability, and doing the right thing.
Cost savings. Hiring digital nomads enables companies to save money in several ways. First, some employees might be willing to trade a higher salary for the ability to live in distant locations. They will do that, especially if the cost of living there is less than in the U.S. Next, fewer workers in the office means less office space needed, as well as everything that goes along with it, such as furniture, equipment, and utilities. Another potential for cost savings is the ability to reduce resources spent on the hiring process with happier employees sticking around.
Higher retention. One of the barriers companies see to hiring digital nomads is high turnover. Yet, the opposite appears to be true. Elsewhere in this article, we discuss the high level of job satisfaction expressed by digital nomads. That level translates into higher retention. Employees getting everything they want from their employer do not need to look for something else.
Cons
What may first appear as a lifestyle choice that employees make for themselves is actually a situation requiring employers to become actively involved.
Tax rules. According to the Tony Blair Institute for Global Change, “Where a person resides and where they are taxed do not necessarily go hand in hand.” That’s why some countries have adopted a practice known as tax residency, which means visa holders pay taxes in that country but receive a tax break for doing so. Others allow residents to retain tax residency in their country of origin. Such issues can become complicated, so companies must carefully examine the tax implications of hiring digital nomads.
Legal issues. Companies may be responsible for ensuring their employees are legally employed. For example, U.K. law compels employers located there to prevent illegal working. According to an article on Raconteur, employers “must therefore ensure that all their employees, wherever they are located, have the right to work and have secured the correct visas.”
Reputational damage. Employees behaving badly or disrespectfully in another country could reflect poorly on their employers. Additionally, large numbers of digital nomads descending on a community with much higher salaries than locals can disrupt the balance in housing as they demand newer residences with more amenities, which are sometimes built at the expense of existing housing being torn down.
Considerations for Hiring Digital Nomads
Allowing digital nomads as employees might be interesting, fun, and beneficial in many ways. But is it suitable for your company? Here are just a few factors to consider when making that decision.
Physical or Synchronous Presence
The IMD article states that digital nomads are “creating new habits and routines to put to bed yesterday’s rules, such as the ‘9-to-5’ or that weekly meeting on a Tuesday afternoon.” For example, with team members in different time zones, to avoid significantly disrupting personal and sleeping time, managers may need to hold certain meetings more than once or creatively use technology for team communication.
Employee Motivation
Today’s employees are motivated by different factors than in previous decades. For example, some digital nomads see a trade-off between making less money but having the ability to live in a place they like that has a lower cost of living than the U.S. For these workers, flexibility is key. Take the time to understand what desirable candidates truly want and see if you can find a way to make it happen.
Cybersecurity
During the pandemic, IT teams discovered the challenges of moving entire teams from an on-prem model to a WFH one. Internet access, insufficient passwords, and potential exposure to people not authorized to view confidential materials were just some of the complications. Having employees in different cities, states, and even countries multiplies the potential for cybersecurity threats.
Steps for Success
Take these initial steps to start preparing your company for hiring digital nomads.
Have a Policy
The most important thing about a company policy regarding digital nomads is to have one. Companies that don’t risk problems with taxes, legal requirements, and other tricky matters. A policy should include the following items and any others your company deems important.
Define Digital Work
Spell out what remote and digital work mean within the context of your business. As with the hybrid work model, many team members work remotely full-time or only part of the time. How nomadic can they actually be? Do you want them to remain in the U.S., or is international travel okay? If so, are there any countries that are preferred or off-limits? Is there a time limitation on how long they may be nomadic or stay in any one place?
Talk About Taxes
Find out the tax implications of team members working in various jurisdictions. For example, suppose a worker is your employee but technically a resident of another country. In that case, you may need to follow additional processes to remain compliant with the laws in both places. An international tax accountant should be able to help you sort out this issue. The outcome of your research here may impact the previous item — where employees are allowed to work.
Address Legal and Ethical Concerns
Do your due diligence in finding out what your legal exposure is in having digital nomads as employees and what those workers need to do to be legal no matter where they are. Also, even if you’ve never had a conduct policy at your company, you might want to create one now. How your employees behave in foreign lands can impact your reputation, perhaps even to a problematic degree.
Consider Communication
Every organization must communicate effectively to accomplish its goals, no matter what industry it’s in or how many remote versus on-site workers it has. In your policy, outline the expectations for communicating daily, weekly, and monthly. For example, determine whether workers will be expected to participate in meetings in real-time and, if so, how often.
Train Employees
Once you have your policies in place, train employees who are interested or already participating in this working style. Create handbooks, slide decks, videos, or other materials to help them take the necessary steps, such as obtaining needed visas or using technology tools to communicate properly.
Be Ready to Change
Digital nomadism is still new to many companies, so consider any steps you take to be an experiment. Be ready to change your procedures or discontinue allowing digital nomads if the practice does not work for you.
Digital Nomads Bring the World to You
The digital nomad working style is about as far removed as could be from the traditional “going to work” scenario, in which every employee converges at a single location of decades past. As an employer, you might feel a sense of losing something, but consider what you’re gaining.
Employees being out in the world can be considered an arm of your company, making contact with others who could bring new opportunities. Additionally, employees gaining new professional and personal experiences are bringing new ideas that could just become your next big thing.
