A digital nomad is a remote worker who travels while earning a living online. In other words, a free spirit who isn’t tied to a particular workplace or home office.

A growing number of remote workers are choosing to relocate, some only for short ‘workcations’, some for the longer term. For many, becoming a digital nomad is about being closer to family and friends, while others want to experience a new culture or fulfil a lifelong dream.

The stats suggest this is a trend that employers need to take notice of. The number of Americans who describe themselves as digital nomads jumped by a staggering 131% between 2019 (pre-pandemic) and 2022 (post-pandemic), according to MBO Partners.

Another study estimates there are already 35 million digital nomads worldwide , with this set to grow to a billion by 2035.

Digital nomads work from hotel rooms, cafes, libraries, co-working spaces and relatives’ homes. In fact, anywhere with an internet connection.

As you might expect, many digital nomads are freelancers, but increasingly they’re also employees who work for companies that allow remote work. In 2022, two-thirds of digital nomads were full-time employees, up from 44% in 2019. Digital nomads typically work in fields such as IT, design, marketing, media, accounting, consulting and online tutoring.

Since the pandemic, many employers have become more open to flexible, remote work arrangements, and requests from employees to work from overseas are more common than ever.

To capitalize on the trend, more than 50 countries , including Thailand, Costa Rica and Portugal, have now launched digital nomad visa programs to cut red tape (including tax liabilities) for remote workers. These allow people to spend longer in a country than on a tourist visa, while at the same time boosting the local economy.

Welcoming digital nomads to your team can bring many benefits to your business, including

If you’re struggling to fill skills gaps locally, you can cast your net wider. Because you’re not bound by location, it’s possible to draw from the talents of people from all over the world. What’s more, digital nomads tend to be highly skilled, self-motivated individuals who are tech-savvy. Broadening your horizons can help you find the skills and expertise you need without paying over the odds.

A clear benefit of hiring digital nomads is reduced overheads and travel costs. The fewer onsite people you have, the less office space you’ll need. The upshot is less spent on outgoings like rent, utilities, broadband, stationery and travel expenses.

If your digital nomads are freelance, you’ll also save on sick pay and employee benefits. This could be a particularly cost-effective way of working for start-ups that can’t yet afford office space.

Hiring people of different nationalities and backgrounds is a great way to increase diversity in your workplace. Having an inspirational mix of people working for you can help bring new ideas, fresh perspectives and innovative solutions to your organization that you may not otherwise have thought of.

By their very nature, digital nomads like flexibility. This is great news for your business – they can provide cover round the clock from different time zones. Ideal for international companies. Say your website goes down overnight – you won’t have to wait until the next morning for your in-house IT team to fix it, so won’t miss out on valuable revenue from international customers.

If you like the idea of recruiting digital nomads, be sure to weigh up the potential downsides too. They include:

One of the main challenges of hiring digital nomads is that they're not always available when you need them, and there may be times when they’re unreachable, especially if they’re freelancers. Plus, internet connections aren’t always reliable, which can make it difficult for nomad remote workers to stay connected and get tasks finished on time.

When digital nomads are in different time zones, working on projects that require real-time communication can be a headache. Expecting them to show up for a virtual meeting or reply to emails in the middle of the night probably won’t go down too well.

A dream relocation for an employee can be a legal minefield for HR and compliance teams. Different countries have different rules and regulations to adhere to. You can easily get caught out if you’re not fully across rules on immigration, work permits, employment rights, tax obligations, intellectual property and so on. If you don’t comply with the rules, your business may face fines or even legal action.

Legal issues and complex admin involved with recruiting globally dispersed teams amount to a pile of paperwork. Filling in the relevant documents can be very time-consuming, and you may have to seek professional advice to make sure you’ve processed everything correctly.

Digital nomads often use public Wi-Fi, but this can be a major cybersecurity threat unless they use a data-encrypting VPN (virtual private network). Hackers can steal personal details and passwords, which could put your company’s sensitive information at risk. Device theft is another concern, especially if your employees haven’t properly secured their equipment.

Even if your organization has fully embraced remote working, you might still be unsure about offering total flexibility to your employees. But with a growing number of people wanting the freedom to work wherever they like, you risk losing your top talent if you dismiss the idea out of hand.

On the plus-side, digital nomads report 13% higher job satisfaction than other workers. This is great for retaining talent for longer. Further research shows that 20% of remote workers would be likely to stay 10 years longer with their current company if they could work anywhere in the world without it affecting their salary and benefits.

Digital nomad living can also do wonders for people’s wellbeing. Perhaps you have employees who are stuck in a rut and need a change of scene to get their mojo back. Ultimately, if people are happy, healthy and motivated, it’s your bottom line that benefits.

But to make it work for your business, you’ll need a digital nomad policy that also takes into account issues around local employment laws and tax regulations.

If you allow employees to work abroad for the long term, you may be bound by foreign regulations on wages, annual leave entitlement, maternity leave and health and safety etc. And digital nomads can accidentally create a new ‘permanent establishment’ for their employer in the country where they’re working. This could mean your profits are taxed there too.

It’s therefore paramount that you carefully consider your legal obligations before agreeing to a digital nomad arrangement.

If you think virtual nomads could be good for your business, here’s how to make a success of managing digital nomads:

Putting together a comprehensive digital nomad work policy can allow you to maintain control of how your people move around. It has been known for some remote employees to return to their home country or retreat to a second home overseas without letting their employer know.

Setting up a formal arrangement means you can outline all the legal and practical requirements for nomads so they can enjoy flexibility but still work in a professional, safe and compliant way. Remember to regularly update and review your policy to make sure it’s still working for you and your remote nomads.

Wherever they work, nomads need to follow local employment laws. There can be serious consequences for both employees and employers if they get this wrong, including fines and penalties. Make sure you keep track of any changes or updates to regulations – and let your nomads know.

You can reduce the risk of remote nomads falling foul of local legal, tax or compliance issues by limiting the amount of time they can spend in any one location and listing places that are off-limits.

While flexibility is key for digital nomads, it’s still important to set boundaries and outline what’s expected of them. For example, you might request that they work in professional environments with few distractions, such as co-working spaces and hotel rooms, rather than a hammock by the sea. And you may want to set core hours for when meetings and synchronous collaboration take place.

Be clear about working patterns, tasks and deadlines, and establish a primary way of communicating. Which brings us to…

Clear communication is vital for running a successful distributed team. It’s important to have regular check-ins with virtual nomads to find out how they are and whether they have everything they need to do their job effectively.

Regular communication will help them feel engaged, supported and more committed to achieving company goals. Use an online platform for instant messaging, meetings and task management.

Isolation and loneliness can be an issue with any type of remote working, so make sure digital nomads feel just as much a part of your team as any other employee.

Try to make your social events more inclusive. Organize virtual team activities and celebrations that everyone can attend, no matter where they are. Not only will this help nomads feel more connected, it will also boost team collaboration and communication.

Companies now have greater opportunities than ever before to tap into the rich pool of talent available worldwide. By accommodating those who want the freedom to roam, you can equip your workforce with the skills they need to thrive in a diverse global market.

Keep reading:

• Why trust is the number one ingredient in successful remote working teams
• 5 hacks for managing mobile workers
• 9 tips for team building with remote teams