Four Considerations for Managing a ‘Digital Nomad’ Workforce

a laptop on a desk in the jungle

The travel bug is alive and well and 2023 may be a record year for global travel, according to two separate studies from American Express Global Business Travel and Travel Experts. At least some of the pent-up demand will come from remote workers who choose to travel the world and work from any location they wish. 

As the list of countries offering special ‘digital nomad’ visas continues to grow, with Portugal recently making headlines for its new visa program, the global economy still faces a troubling labor shortage, as discussed at the recent World Bank and International Monetary Fund Annual Meeting

Thanks to these converging trends, companies may look to tap into remote talent pools – which will almost inevitably expose them to the challenges and risks of engaging digital nomads. The following are four HR considerations companies with remote teams should take into account when approaching the “new world of travel” and work

Regulatory compliance and tax liabilities

It can be challenging to keep track of a digital nomad’s GPS coordinates and they may not always be forthcoming about where they are living and working. Most companies don’t have official policies in place to manage the digital nomad lifestyle, which can put them at risk for regulatory compliance risks, labor audits and global tax liabilities due to permanent establishment.

While employers may be fine with a worker taking an extended “workation” in another country, governments decidedly feel different. New regulatory measures and statutory frameworks are emerging to address how remote work is treated in terms of tax, payroll administration, benefits, compliance and other functions of business planning. For example, provisions concerning remote work were recently integrated into the labor codes of Chile, Norway and many other countries.

Intellectual property protection

As teams increasingly work remotely, company data is proliferated across devices and clouds that are often not even owned by the company. This puts a company’s intellectual property (IP) at risk, including ideas, patents, trademarks, trade secrets, franchises and copyrights. IP protection matters for any company, as its proprietary products and services are what allow it to stand out from the competition and attract customers. 

When a company employs digital nomads, however, IP risks may be heightened as each country maintains its own code, with some countries having more stringent regulations and others having more relaxed standards for protecting IP. 

IP is a linchpin for driving value and unlocking a competitive advantage in the marketplace. But how can a company adequately protect its IP when it may not even know exactly what country a worker is in?

Companies adopt a framework for engaging digital nomads – one that allows them to keep track of where their workforce is and protect their IP accordingly. 

Tapping into digital nomad talent pools

Demand continues to surge for high-quality, cost-effective remote technology and sales talent, despite market downturn, layoffs and uncertainty. Some of the hot industries experiencing the “war for talent” are artificial intelligence (AI), machine learning (ML), blockchain, healthtech, quantum, robotics, virtual reality (VR), Web3 and fintech. 

For example, while developer shortages in the U.S. are likely to exceed 1.2 million by 2026, this is one of the most popular jobs that digital nomads fill

Companies can open up new workforce pipelines by tapping into digital nomad talent pools. The challenge for companies is finding the right worker for the position and putting the right framework in place to engage that worker compliantly and efficiently. As the digital nomad workforce grows, it will be key for companies to use new resources so they can successfully maintain a remote workforce.

The Employer of Record hiring model is here to help

While there’s a myriad of challenges in managing a digital nomad workforce, the rewards outweigh the risks. 

The Employer of Record (EOR) hiring model can help companies circumvent many of the risks associated with employing remote workers. Hiring through an EOR effectively protects both the company and the individual by minimizing the global tax footprint, ensuring compliance, mitigating risks of permanent establishment, promoting IP protection, streamlining cross-border payroll, offering options in benefits, supporting recruitment and saving all parties time and money. 

With an EOR at your side, you can tap into an endless pool of top candidates and engage some of the most talented individuals in the world – no matter where they’re living and working this week, next month or next year. 

Check out our ‘What is an EOR?’ guide or contact us to talk with an international HR expert and learn more about how partnering with an EOR can help you tap into boundless pools of digital nomad talent.