Digital Nomads Find New Leverage Over Employers

Image credit: iStockphoto/Egoitz Bengoetxea Iguaran

Back before the pandemic, Estonia was the global pin-up city for digital entrepreneurs.

A fast and easy-to-navigate visa program, modest housing rent, excellent digital infrastructure, and a community of like-minded people made it a mecca for young entrepreneurs from western Europe and beyond.

Unsurprisingly, it spawned some successful companies. For example, while Estonia might be best known as the home country for Skype, ride-hailing app Bolt and fintech Wise have had some international success beyond their Estonian incubators.

According to Dr Parag Kanna, around 70 cities in the post-pandemic era have copied the Estonian model and are now in competition for the global digital workforce.

“We are entering the next great war for talent, where countries and companies are competing for childless young people who can be anywhere, and are arbitraging and have leverage over employers,” says Khanna, the founder of FutureMap and whose recent book Move also takes up his long-standing theme of migration and demographic change.

Khanna sees many cities around the world with the current status as the “groovy new city.”

Cheap rent and internet

The Georgian capital of Tbilisi, he says, is full of young people attracted by cheap rent and good internet. Athens and the Slovenian capital Ljubljana are others, while Miami has become the center of the crypto industry.

“But the point is that young people are not loyal to these places, so [the city administrators] have to work hard to maintain that status as the hot hip hub,” says Khanna.

“Climate change and political risk could easily push [the young people] out and see them move on. There could be a civil war in Georgia, for example, and everyone could leave.”

Khanna’s point is that the digital workforce is now more mobile than ever, and they have more leverage than ever before over employers.

The point is that young people are not loyal to these places, so they have to work hard to maintain that status as the hot hip hub

One caveat, however, is that many companies are asking workers to stay in the same time zone.

“People are getting sick of passing google docs on to colleagues on the other side of the world overnight and communicating overnight on Slack,” says Khanna.

“So many companies are asking people to stay in a time zone, or a hemisphere, and renting offices in those countries where people can come to meetings and spend some time collaborating locally.”

Another trend is what Khanna calls “double outsourcing,” a phenomenon he sees particularly in Asia.

This is where large tech companies, and he gives the example of Facebook and Google, will have a subsidiary operation in a city such as Singapore, but the Singapore office is then hiring remote workers in Bali.

Talent arbitrage

From Globalization Partners, Charlie Ferguson has a complementary perspective.

Ferguson’s company offers corporates a global platform for the hiring of talent anywhere in the world.

The company is set up in just under 200 jurisdictions worldwide and has engaged “thousands and thousands” of employees on its platform on behalf of ultimate employers, for whom it is too costly, complicated, or too early to set up their operations in-country.

“We had a company in Canada which couldn’t find a data scientist in Canada but could only find who they wanted in India,” says Ferguson.

“So they used our platform to engage remote workers. They found the talent in India, rented out an office in a co-working building and decorated it exactly like their office in Canada, and paid that person Canadian wages until they could emigrate to Canada.”

While the world has changed rapidly due to COVID, Ferguson still sees employers stuck in the mindset of “low-cost labor arbitrage” when looking at talent in developing countries, and he believes this is a mistake.

These firms, he says, will lose out because other firms will pay more, and they are blinkering themselves to a much larger talent pool of “seven billion-plus people.”

“It’s now a talent arbitrage story, not a low-cost labor arbitrage story,” says Ferguson.

“Access to talent is not only the top priority for digital companies which want to grow, but it is completely and utterly borderless.”

Lachlan Colquhoun is the ANZ correspondent for CDOTrends and DigitalWorkforceTrends and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].

Image credit: iStockphoto/Egoitz Bengoetxea Iguaran