During the height of the COVID-19 pandemic, many businesses opted to adopt remote work for safety reasons. And now that restrictions have eased in most places, some of those businesses are wondering whether to continue with remote work or have employees return to the office.

Meanwhile, many employees have grown accustomed to working from home or at hybrid workplaces. And with all that’s been going on, some are now asking, “Do companies save money with remote employees?”


Quick Answer: Yes, companies save money with remote employees working in hybrid workplaces because they pay less in rent and utilities, travel and relocation expenses, cleaning, security services, and food. Companies also report seeing an increase in profitability with remote and hybrid workers.


We’re here to answer that question once and for all.

Let’s dive in.

Do Companies Save Money With Remote Employees? Short Answer: Yes

As many studies show, companies can expect an increase in cost savings with remote employees. That’s because it costs a lot to run a business on-site five days a week, all year round.

First, you have to rent a building. Then you have to buy office supplies, shop for food and coffee, and pay someone to clean the office. And if your employees are relocating to your premises, you’ll have to pay for their travel expenses, too.

Switching to hybrid work or remote work instantly eliminates the overhead of many of these fixed costs. Here are just a few of them:

Rent and Utilities

Naturally, the more employees you have working on-site, the bigger your office space needs to be.

In fact, annual occupancy costs in Manhattan reached over $169 per square foot in the second quarter of 2021. But if a significant amount of those employees work from home at least some of the time, you’ll be able to downsize to a smaller office and pay less in rent.

According to Global Workplace Analytics, a remote workforce helped IBM save $50 million on real estate costs.

image of a rent label

And it’s not just rent that adds up, of course. With a fully on-site workforce, you’ll need to buy enough desks, chairs, computers, and laptops for everyone who works there. Depending on the size of your workforce, those things can quickly add up.

Having remote workers working from remote spaces or formatting your business to fit a hybrid model means you’ll save money on office-related expenses. You can reduce the amount of office furniture and other office supplies required while keeping just enough for those who need to be on-site a few days a week.

And it doesn’t stop there.

A smaller office also means paying less for electricity, and fewer people in the office means you can cut down on internet bills. You’ll also save on water bills since you’ll have fewer people using the bathroom.

illustration showing the savings that companies gain from having remote employees

Travel and Relocation Expenses

With the advent of video conferencing software and other communications technology, many employees no longer have to travel for business. They can meet with clients, customers, or colleagues online from the comfort of their own homes.

Companies with remote workers also save on relocating their employees. For example, Nortel says they save up to $100,000 per employee in relocation expenses.

Cleaning and Security Services

With fewer people in the office, executives won’t have to pay as much for cleaning services, and you can also save on security services.

Food and Beverages

Having employees work remotely means you’ll be able to cut back on coffee, snacks, and refreshments purchased for meetings. The same goes for on-site cafeterias. This also means you’ll save on food storage, dishes, and cutlery.

Companies Also See More Profitability With Remote Workers

Companies not only save money with remote workers, but they profit greatly from them, too. Here are a few areas in which remote and hybrid work can help a business profit:

Increased Productivity

Workers are most engaged when they spend 60–80% of their time working remotely — typically three to four days out of a five-day workweek.

employees brainstorming in the office

And when workers are engaged, they’re more productive. Specifically, engagement increases productivity by 18% and profitability by 23%.

Here’s how that translates into the real world: in a poll conducted by Global Workplace Analytics, American Express’ remote workforce was found to be 43% more productive than their office-based colleagues.

Read more about remote work productivity.

Increased Employee Retention

54% of workers say they’d change jobs if given the choice of doing remote or hybrid work. Also, 46% of companies that allow some kind of hybrid or remote work arrangements say it has reduced attrition. So it makes sense to allow your employees to work remotely at least some of the time.

employee hiring and retention

So, according to the statistics, keeping your best employees isn’t only profitable for your company, but it also saves you money. That’s because replacing an employee can cost a business up to two times that individual’s annual salary.

Less Absenteeism

Here’s some perhaps surprising news: 78% of workers who call in sick aren’t sick at all — instead, they’re stressed, are experiencing family issues, or want to take care of their personal needs. Unfortunately, absenteeism costs employers $1,800 per employee per year.

Even worse, companies that forced a return-to-office policy after having allowed remote work have seen up to a 60% increase in absenteeism.

Allowing employees to take control of their own schedules (flexibility) not only reduces absenteeism but also shows them that you trust them to do their jobs regardless of where they work. That, in turn, leads to a happier, healthier, more productive workforce.

an illustration showcasing employees

Larger Talent Pool

It used to be the case that companies could only hire from in or near the location where the business is set up — or pay someone from a little farther away to relocate.

Remote-first policies instantly eliminate that limitation. It opens your company up to a global talent pool that can do their work right from their own homes, and it makes it easier for you to find the perfect match for your company.

Additionally, offering remote work also gives access to workers with disabilities, which further expands the talent pool.

So, yes, flexible working hides great benefits for employers.

Costs and Drawbacks of Remote Work

While there are many benefits to remote work, there can also be costs and drawbacks. Here are a few of them:

Data Security Issues

To enable telecommuting arrangements, companies must invest in technology such as video conferencing software and project management tools.

data security breach

These additions, while necessary, do run the risk of data security issues, as can be seen by the many hacking scandals that have racked up over the years.

Companies also have to invest in security training for all their employees to ensure that employees using company apps or equipment at home are still taking security precautions, such as VPNs, when they’re not covered by in-office IT protections.

Collaboration Concerns

52% of employees feel less connected to their coworkers after shifting to remote work.

There’s also a risk of creating an “ingroup” and “outgroup” if some employees work remotely while others work on-site.

Fortunately, you can promote effective in-person collaboration by using the right tools and technology, such as OfficeRnD Hybrid and its set of collaboration-boosting features.

Read our case study to see how Tavistock enabled in-person collaboration while adopting a hybrid model using OfficeRnD Hybrid here. Plus, they cut down on real estate costs!

Occupational Safety and Health Administration Issues

Employers may be liable for accidents in a worker’s home, as per Section 1904.5(b)(7) of the Occupational Safety and Health Administration (OSHA). Here are a few examples from the OSHA itself:

“If an employee drops a box of work documents and injures his or her foot, the case is considered work-related. If an employee’s fingernail is punctured by a needle from a sewing machine used to perform garment work at home, becomes infected and requires medical treatment, the injury is considered work-related.”

a hurt elbow

Please note that the OSHA doesn’t consider incidents like the following work-related:

“If an employee is injured because he or she trips on the family dog while rushing to answer a work phone call, the case is not considered work-related. If an employee working at home is electrocuted because of faulty home wiring, the injury is not considered work-related.”

an employee working from home with back issues

As usual, it’s best to keep abreast of occupational and safety laws in your country to ensure everything is above board.

Furthermore, don’t forget to acknowledge the fact that remote work has special tax implications.

Save Even More Money With OfficeRnD Hybrid

Do companies save money with remote employees? We can safely say that the answer is yes. Not only does it save companies money, but companies have also reported seeing an increase in profitability and their ability to retain the best employees.

On the other hand, remote work isn’t for everyone. Some may prefer going back to the office, while others may opt to work remotely for only part of the week. That’s why a hybrid work arrangement is the best.

Whatever work option you choose, you can save even more money with OfficeRnD Hybrid – the leading hybrid work management platform.

Let your employees set their own schedules in advance with our smart scheduler, and if they choose to come into the office, they can also book a desk. We offer a rich set of collaborative features, too — just integrate them with your preferred tool, and voila! It really is that simple.

Get started for free with OfficeRnD Hybrid or book a live demo with one of our workplace experts.

FAQ

How Do Companies Benefit When Employees Work Remotely?

Companies that have employees working remotely benefit by cutting their costs, increasing their profits, improving their productivity, reducing their turnover rates, and, perhaps best of all, increasing their job satisfaction rates.

What Are the Disadvantages of Employees Working Remotely?

Disadvantages of employees working remotely include problems with data security, collaboration concerns, and OSHA-related issues.

Are Employees Happy With Remote Work?

Yes. According to a Buffer report, 97% of employees would recommend remote work to others. The same proportion would also want to work remotely for the rest of their careers at least some of the time, and 90% have had positive experiences with remote work.

What’s the Biggest Benefit You See To Working Remotely?

The biggest benefit to working remotely is flexibility. In the same Buffer report as that mentioned above, 67% of employees cite flexibility in how they spend their time as their biggest benefit. Meanwhile, 62% say flexibility in choosing where they work is their biggest benefit.

Asen Stoyanchev
Senior Content Marketing & SEO Specialist | OfficeRnD
Asen is passionate about flexible working and the future of work. He firmly believes that work flexibility directly impacts one's health and well-being. When he's not writing, Asen spends his time devouring business literature, hiking, and parenting.