We’re witnessing a long-term shift towards working from home. Nearly three in four CFOs plan to shift a portion of their on-site employees to permanent remote positions. Beyond public health and safety, there are several financial drivers incentivizing work from home.
- A reduction in operating expenses.
- Payroll savings associated with lower cost of living.
- Productivity gains.
- An expansion of the labor pool, including access to a global workforce.
We’re already seeing companies alter their leases and on-site contracts as part of a permanent adjustment. A recent Gartner survey revealed that in April of 2020, 13% of respondents had already made cuts to real estate expenses, with an additional 9% planning to do so in the near future.
This coincides with the cost saving efforts we’re seeing companies make in technology spend and other on-site overhead that have become less critical in a predominately distributed, work from home environment.
Projected annual savings for workers and employers with remote work.
Multiplied across a workforce, savings associated with reduced operational expenses translates to significant numbers. According to Global Workplace Analytics, companies will save an average of $11,000 a year per employee when employees work from home at least part-time.
Rent and utility costs. Maintenance. Travel expenses. It all adds up, and not just for the employer.
The same Global Workplace Analytics report demonstrates cost savings for employees who work from home. This includes a reduction in transportation costs, fewer lunches bought out, and less need for professional wardrobe and accessories. Annually, employees who spend a portion of their week working from home are saving between $2,500 and $4,000.
But it’s more than just cost savings, employees who work from home are actually happier and more productive.
A Harvard Business Review study found a 4.4% increase in productivity when employees work from home. This boost comes from a variety of sources, including better work-life balance, a decrease in commute time, quieter noise levels, and fewer interruptions.
Projected savings over the next five years for remote work companies.
The shift towards a modern and distributed workforce is proving to be incredibly popular with employees. 44% of employees would take a pay cut to permanently work from home. One 2019 study shows that remote employees work an average of 1.4 days more than their office counterparts. Another shows a dramatic reduction in absenteeism.
The positive response from employees demonstrates a bigger benefit than a reduction in costs. It shows demand for a modern approach to work.
Chief Strategy Officer, ASSIA, Inc.
Tuncay is responsible for formulating future product lines, business partnerships, and corporate development activities. Previously, he served at ASSIA as SVP Product Management, and conceived CloudCheck® – the cloud and mobile business of the company. Prior to ASSIA, Tuncay built the product management and product marketing teams at AirTies networks as VP Product Management to support large scale expansion into the European Service Provider market. Before AirTies, Tuncay worked at large publicly traded companies and venture backed start-ups in engineering, product development, marketing and general management roles in Silicon Valley. Tuncay holds BS degree in Physics from Turkey’s top engineering school Bilkent and an MBA from Yale University, where he was awarded John M. Olin Fellowship in Telecommunications Research.