A lot has changed in terms of how we work in the year since the world largely went into lockdown. The number of people who work remotely has increased substantially, with 88% of organizations around the world allowing or making remote work mandatory after the pandemic started. In fact, since 2005, work from home has increased by 140%.
Many businesses have suffered financially in the wake of the recession that accompanied the COVID-19 pandemic. But it hasn’t been all bad news. Outsourcing services are carving out a niche in the economy. Employees are getting more satisfaction out of working from home. And many businesses are even saving money under the new model.
In fact, Gartner found that 80% of organization leaders will continue to allow employees to work remotely at least on a part-time basis even after the pandemic ends.
There is a common misperception that working from home leads to less productivity. In fact, the opposite is true. A Mercer survey found that 94% of employers say the productivity in their organizations has been the same or higher since employees transitioned to working from home in light of the pandemic.
This is consistent with research on remote work conducted before the pandemic. As far back as 2013, a Stanford University study found that remote workers are 13% more productive than those working in the office.
While many employees have had to grapple with challenges like watching children while balancing work during the pandemic, there are many ways the environment lends itself to more peace and productivity. Workers have fewer in-office distractions from colleagues, for one. They also don’t have to deal with a commute, which means more focused work time. Plus, employers are likely to see less absenteeism.
Reduced Overhead Costs
Overhead costs add up to a substantial expense. The lion’s share of this comes from the property itself. In New York City — admittedly one of the most expensive real estate locations in the United States — the average price for office space per employee was roughly $14,800 per year. Even for a small business, the costs are quite substantial.
Plus, there are numerous other expenses to account for, such as electricity and other utilities, as well as office supplies, technology and equipment, and so on. When employees work from home, the most substantial of these costs are negated.
Less Need for an In-House IT Team
An in-house IT team can be enormously expensive. And while it makes sense to have one on-premises in some cases, when your team is wholly or largely working remotely, it’s probably far less necessary.
Instead, businesses can use an IT outsourcing model, which involves turning over major technology operations and technological upkeep to an external individual or partner company. Under this type of partnership, businesses can pay for the services on an as-needed basis, rather than paying full-time salaries and benefits to staff members. If it’s successful, the partnership could last for a long time.
Moreover, many organizations are increasingly relying on cloud computing for storage and other IT operations. This, too, is a less costly model than having an intermediary keep track of files, important data, and more.
Companies that encourage their employees to work remotely have a 25% lower turnover rate compared with companies that don’t, according to OwlLab’s State of Remote Work 2020 report.
Why is retention so important? In addition to the obvious — companies keep their talent — it’s also significantly cheaper than having to find new employees. The hiring process itself is quite costly, and that’s on top of the expense of training people and the loss of revenue experienced while new employees are getting up to speed.
As it turns out, employees who are able to work from home rather than in a workplace setting are more satisfied with their jobs. In fact, one study found that employees would choose the option of working from home overtaking a pay raise — something that will almost certainly come as welcome news to employers.
Perhaps these are some of the reasons why so many employers are eager to continue the work-from-home model permanently. A 2020 Upwork report predicts that the number of remote workers will nearly double by 2025, up to 36.2 million Americans. In contrast, just 19.4 million Americans were working remotely prior to the pandemic.
Cost-effectiveness, of course, plays a huge role in business decisions and is a major determinant in whether or not they succeed, especially during a particularly tumultuous time in our global history. Some organizations have already failed in the past year, and others will likely reach the end of their rope this year. But making choices that retain employees and save you money could separate the successful ones from the rest.