Does Working From Home Save Companies Money?

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The COVID-19 pandemic has shone a light on working environments, particularly the possibilities of working remotely. According to a GetAbstract survey, almost 43% of full-time employees in America want to work remotely even once this crisis has passed, and the economy reopens. But, is this beneficial for companies? Can working from home save companies money?

The pandemic accelerates the shift to remote work

As most people are aware, since the COVID-19 outbreak, the economy has been on hold. Lockdowns went into effect in March, and businesses were encouraged to have employees working remotely from home to maintain social distancing. 

While this was not possible in all industries, the economy’s closure forced many companies to consider the ways that employees could work remotely. Although this took some logistical planning, the abundance of technology that we now have has made it feasible.

There have also been some unexpected effects of employees working from home. According to an IQAir report, the slowdown of economic activity during the pandemic has the potential to reduce fine particulate air pollution by as much as 60%.

In a Gartner survey, 3 out of 4 finance executives asked are considering moving at least 5% of onsite workers to a remote position permanently after the current pandemic crisis ends.

However, what many companies want to know is if having remote workers will save them money and what other benefits it could provide.

Cost savings of allowing employees to work from home

There are lots of ways that remote working can offer businesses cost savings. Many established businesses have already enjoyed savings due to telecommuting. Sun Microsystems identified savings of $68 million a year in its real estate costs, while Dow Chemical and Nortel have saved over 30% on non-real estate costs.

According to Global WorkplaceAnalytics, almost 6 out of 10 employers identify cost savings as a major benefit of telecommuting.

Rent and utilities: If most of your team is working from home, you won’t need to pay for larger premises, saving money on rent and utilities.

Cleaning services: With minimal staff onsite, your cleaning services bill is likely to significantly decline.

Food: Whether it is providing a cafeteria service or serving refreshments during meetings, if you have remote employees, you will eliminate this cost.

Taxes: There are three factors that determine a company’s tax burden: payroll, sales and property. Making changes to accommodate remote workers could also impact your tax burden.

Other potential benefits of a remote workforce

While direct money savings are important, there are other benefits associated with telecommuting that can save money in the long term.

Improved employee retention

Recruitment can be one of the biggest headaches for businesses, and it can be even more frustrating when those carefully sought-out team members decide to leave.

Working from home can provide parents with childcare responsibilities flexibility, while other workers can enjoy an enhanced work-life balance that will help your business to see an improvement in employee retention.

Increased productivity

While it requires a certain degree of trust to allow employees to work from home, your business could benefit from increased productivity. A Stanford study found that remote workers are 13% more productive when compared to their in-office counterparts. 

Remote workers are not in a loud environment and are not distracted by their co-workers. Additionally, remote workers don’t have the stress of commuting, which means that they can focus on the task ahead rather than needing time to calm down after tackling the morning rush hour.

Reduced payroll costs

While you’re not likely to have happy employees if you want to cut their salaries in exchange for a more flexible workplace, research shows that almost one-third of employees would choose to work from home over a pay raise.

This means that you can reward your employees for their good performance with the flexibility of working remotely rather than a pay increase. You can keep your payroll costs down without compromising productivity.

Reduction in absenteeism

Flexible scheduling allows your team members to fit their work around any personal obligations that would otherwise have, resulting in taking a day or two off.

However, studies have shown that a flexible work schedule also leads to healthier employees. Remote workers tend to be able to bounce back more quickly from illness, and there is no risk of one cough or cold traveling through your entire workforce, should someone fall ill.

Eliminate unnecessary meetings

Most business owners appreciate that meetings can be a time suck and waste precious resources. Even with the most stringent of agendas, it is still difficult to keep everyone on track and organized.

There are also delays that result from trying to coordinate people from multiple departments into one venue. With current technology, you can still collaborate, but your meetings are likely to be better planned and remain on message.

The costs of employees working from home

Teleworkers will need access to software, data and your computer systems. You may need to make some infrastructure changes to support remote workers and prepare for any remote technical support issues.

Fortunately, there are lots of solutions on the market, but you will need to factor this into your costs. You will need to think about what software and other tools your team will need to work efficiently from home. For example, you may need to pay for video conference software or other collaboration tools.

The potential drawbacks

No solution is 100% perfect, so you need to be aware of the potential drawbacks before you commit to adopting a teleworker team. These include:

It isn’t a good fit for everyone. Teleworkers need to be self-directed and comfortable working with remote technology. Additionally, your employee needs to understand that working from home is not a replacement for day care, unless work can be scheduled around their child’s needs. They need to have a defined space for their home office and be able to work without distractions.

Employee fears for career progression. Some employees may fear telecommuting may impact their career progression. They may feel frustrated that they may be overlooked and not have a chance to adequately showcase their skills since they are out of sight. These employees may require regular communications via email, instant chat, phone or even face-to-face meetings to reassure them.

Data security. Security issues can be easy to solve, but they do need to be addressed and could be a potential drawback for your company. Security training will need to be provided for all employees, which will impact cost savings.

Collaboration concerns. Some businesses require energy in the room to fuel effective collaboration. If your company works in this way, distance could inhibit your collaborative processes.

OSHA and employment law concerns. There have been accidents in teleworker’s homes that have raised employer liability concerns. OSHA has several directives for work-from-home employees, and you will still have a responsibility to ensure there is a safe, healthful workplace. There could be issues if you are aware of dangerous conditions in your workers’ homes. An example of this is if your employee works in their basement and the stairs leading to this space are unsafe. This can create legal issues that will need to be fully explored.

Local issues. Some homeowner associations and communities prohibit home offices. There are also clauses in home insurance policies that do not permit working from home. You will need to ensure that your employees are fully aware of these potential issues before you agree to a remote working arrangement.

Tax implications. Finally, while you may be able to cut your costs, there are some potential tax implications associated with having remote workers. For example, there are some cities, such as New York, that impose taxes on remote workers whether they are working in the city or not. This means that if a worker lives in Connecticut, the business may owe taxes to both states.


In the past, working from home was unfeasible for many companies, but today’s technology has made it easier to make this transition. Having remote workers offers businesses a number of benefits, including saving money, but some potential drawbacks need to be explored. Although working from home can save companies money, there are hidden costs that will need to be assessed.

Every business is unique, and so you will need to evaluate the benefits and drawbacks as they apply to your specific business before you make a decision. However, it is worth considering that the COVID-19 pandemic has brought remote working to the forefront of employee’s interest, so it is a good idea to start laying the groundwork to determine if it is feasible for your business after the current crisis has ended.

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