The Rise of the Gig Economy and Digital Nomad: Here to Stay or Gone Tomorrow?

By the SMU Social Media Team 

Today, it seems that as long as one has a steady WiFi, it’s easy enough to work anywhere in the world. More people—this includes both the young and not-so-young—are realising that life may just be too short to stay chained to a desk.

In fact, a 2018 report by accounting firm Freshbooks on self-employment in the United States showed that 49 per cent of freelancers were over the age of 50-years, while a 2018 FlexJob Digital Nomad Survey found that only 27 per cent of digital nomads were millennials or Gen Z, whereas a whopping 41 per cent identified themselves as being from gen X, with 32 per cent being baby boomers.

Digital nomads, in general, prefer short-term contract jobs that allow for more flexibility in choosing their working schedules; thus, freeing up their time to do other things such as furthering their studies, travelling the world, or taking care of their children. In addition, with a growing number of shared workspaces opening up around the globe, more people are able to find joy in this freedom of moving anywhere they want to or to wherever they are needed.

It all sounds like a pretty good deal. But the big question is: How sustainable is this gig economy? Is it here to stay or is it just a fad?

According to Thomas Menkhoff, Professor of Organisational Behaviour and Human Resources (Education) at the Singapore Management University’s (SMU) Lee Kong Chian School of Business, the gig economy is not only a growing trend but is most definitely here to stay. However, he cautions: “While there are many ‘happy’ digital nomads out there who enjoy their independent and self-defined work, short-term contract work has a major downside, too.”

 

Can everyone be a digital nomad?

Thanks to the advancements in technology, the gig economy “has given rise to new nomadic ways of working (digital nomads), new platform enterprises and created new value”, says Prof Menkhoff. It is made up of location independent freelancers and even solo entrepreneurs who often combine work and travel as they are able to work on-the-go or wherever the job takes them.

According to Prof Menkhoff, “almost every job that can be done remotely is a potential digital nomad job”—whether it is something as complex as software programming, online trading, app development, or as simple as dog walking, house- or pet-sitting. “All you need is a computer, a GPS-enabled smartphone, a functioning internet connection (WiFi), and mobile hotspots.”

So fundamentally, yes, everyone can be a digital nomad, to a certain extent.

In addition, the opening of more co-working spaces—such as Wework that boasts 580 office locations around the world from New York City to Dublin, Tel Aviv and Singapore—is making it much easier to work from anywhere in the world.

The allure of this has, in part, given rise to this trend. “To become a location independent ‘digital nomad’ that uses technology to perform a job, however, usually also requires a nomadic lifestyle. Digital nomads are free to live and travel wherever they choose,” says Prof Menkhoff. “You might find them in Bali’s Ubud, drawn by the warm weather and beautiful rice terraces nearby, or in sunny Las Palmas, the capital of Gran Canaria.”

But it is important to note that not all digital nomads live this lifestyle. Prof Menkhoff adds that privileged digital nomads are fortunate to choose such a lifestyle, but not everyone is able to. “Others might be forced into it due to financial challenges, unemployment, ageism or rising living costs.”

 

The pros and cons of working in the gig economy

When it comes down to it, the main draw of being a digital nomad is about the flexibility for both the employee and employer. In addition, Prof Menkhoff states that for companies, the advantages for hiring non-full time workers also include “cutting costs (e.g. those related to benefits), access to a wider range of job applicants, and convenience in closing suddenly arising skills gaps”.

On the other hand, there are disadvantages as well for both the company and gig worker.

While flexibility may be a big draw for entering the gig economy, its current set up often leaves many with little to no social safety net. Prof Menkhoff cites the example of how gig economy delivery workers are “often unprotected in cases of an accident”.

He adds, “I sense that there are also considerable costs attached to independent contracting and virtual freelance work on the basis of ‘gigs’—be it because of the non-existence of ‘a good salaried job with adequate social protection’ at the individual level, or greater social inequality at the societal level.”

As for employers, Prof Menkhoff explains that “potential drawbacks for employers hiring gig workers can include the lack of organisational commitment, unexpected higher training costs—with part-timers who are unfamiliar with standard operating procedures and do not meet customer service excellence standards, or job hopping”.

The main challenge however, is that “many organisations lack the right governance strategies to manage digital nomadism”.

 

The need for support and new workplace regulations

In order for organisations to more seamlessly integrate digital nomads into their business operations, new working procedures must be introduced and enforced. “Day-to-day communication when people are on-the-go requires supportive tools,” says Prof Menkhoff. “Besides phone and E-mail, there are various useful apps such as Slack, which has different channels for team communication, planning of meetings and regular corporate updates. This can also be supplemented by Google tools, such as Calendar so that colleagues know when their team members are available, or Google Sheets, which can help with accounting. In addition, there are several useful client management systems such as Calendly and Trello, a project management software. Regular video chats through Skype are indispensable, too.”

In addition, as more companies look to include digital nomads in their workforce, Prof Menkhoff adds that it is imperative for them to make provisions to ensure a smooth integration.

For instance, a company’s Human Resource department “will need to more effectively onboard contingent workers to leverage their strengths and to manage their performance” as any “disconnect between permanent and non-permanent employees is not good for the organisational culture of a company, and the successful adoption of ‘shared’ values”.

Furthermore, for a market as dynamic as the gig economy, retaining talent could prove increasingly challenging for employers. Prof Menkhoff observes: “While many gig economy workers prefer to be employed part-time due to the freedom and autonomy to travel, flexible working schedules or the possibility to personalise one’s work-life balance, there are many others who are uncomfortable with the lack of job security, paid sick leave and health care benefits.”

If companies are serious about retaining talent, they would be hard-pressed not to include the shift towards a gig economy within their HR strategy.

Ultimately, “business leaders must recognise that the gig economy is here to stay and that giggers deserve more management attention,” says Prof Menkhoff.

 

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