We all know the benefits of teleworking allows companies to save money: a better balance between work and personal life, greater job satisfaction, more time and conciliation.
Additionally, allowing employees to work remotely saves them the daily commute, is good for the environment by reducing greenhouse gas emissions, and, for businesses, a huge opportunity to cut costs.
So much so that Amazon has already begun to cancel its offices under construction because they have realized that they do not need them as much as they thought.
The case of Amazon. The tech giant has red-lighted its construction of five towers in downtown Bellevue, Washington, and will delay construction of a sixth tower in the city. The decision will give them time to reassess the design of workspaces and underscores the uncertainty of the tech industry’s return to the office after more than two years of working from home.
Many companies are seeing employees continue to telecommute more than expected, leading them to rethink their shared offices and workspaces. “It is early days and we are still learning how these new habits can affect our spaces. Our offices are long-term investments and we want to make sure that we design them in a way that meets our needs,” explained the vice president of Real Estate of Amazon.
The hidden savings of telecommuting: up to 650 million dollars a day for not going to the office
Companies save money. That teleworking is an efficient way to reduce costs is a fact supported by several studies. For example, calculations from Global Workplace Analytics suggest that companies can save around $10,000 per employee per year by allowing their employees to work remotely 50% of the time, taking into account productivity levels, real estate costs plus low, reduced absenteeism and turnover.
Flexjobs estimates that US companies saved €30 billion every day during the pandemic while their employees worked remotely. Other examples: IBM reduced real estate costs by $60 million; McKesson points to savings of €2 million a year; Sun Microsystems’ real estate costs have been reduced by $78 million a year.
Energy. As we have commented in Magnet, some regions in the US, such as Utah, have already experimented with three-day weekends, and discovered interesting energy savings (up to $3 million savings in electricity bills alone). In addition, of course, to the derived environmental benefits.
Office cost. Providing office space, internet, electricity, water etc is a major cost factor for businesses. The average cost of office space per employee is estimated to be around $18,000 per year. If we multiply this by the thousands of employees that some large companies like Google or Apple have, we can get an idea of the cost savings of teleworking.
Salary cuts due to relocation. Companies have even wanted to take advantage of salary cuts for mobile employees who decide to move to less centralized and therefore less expensive areas. We have counted it in Magnet. While many do not advocate this strategy, most seem willing to accept pay cuts in exchange for greater flexibility.
Lower absenteeism and better employee retention. Telecommuting also has other benefits that include higher job satisfaction and lower turnover rates. If we add flexible working hours to this, we see how absent times are reduced, which has a positive impact on the profitability of a company.
In fact, a Gallup study shows that companies with a more engaged workforce are 21% more profitable than those with unmotivated employees. And they are less likely to leave their jobs, something we have seen with the ‘Great Resignation’. Another point in favor for companies to reduce their hiring costs.