The financial savings of a remote work model

Many experts are predicting a recession at some point in 2023. The possible explanation for this is a combination of variables, including rising inflation and slow economic growth. Companies with high exposure to advertising and tech businesses or those that are otherwise at risk in a potential recession should take some precautionary steps.

While remote work may not be the first thing that comes to mind if a recession occurs, it can result in significant cost savings. We have seen these savings in the past few years as the pandemic caused many organizations to shift to remote work. In the event of a recession, it is likely that remote work will continue to grow and become more common. With numerous reports demonstrating the cost benefits of implementing a remote work environment, organizations may find that this is the ideal strategy for responding to the challenges presented by a recession.  

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Research shows that companies shifting to remote work save $10,600 per employee annually. Companies are already making this switch and seeing immediate cost-saving benefits. In fact, a company with 50 employees could save up to $500,000. In addition to saving money, remote work also allows employees to have a better work-life balance, which can help increase productivity and loyalty. 

Companies that have fully implemented a remote work environment have seen their costs drop due to things such as the elimination of the need to rent a physical office, the costs associated with commuting, and other expenditures related to running an office. The cost of real estate is typically elevated in large cities and tech hubs, and shifting to remote work can save higher rent costs. Companies can also hire in other markets, expanding the talent pool, at potentially lower rates for lower cost of living areas. The expenses that are usually associated with office spaces, other than rent, also disappear. The cost of furniture, office snacks, supplies, janitorial services, business-caliber internet services, or physical security for the in-person office is no longer necessary with a remote workforce. These expenses are not as impactful as office space rental is, can still add up over time, and any reduction in overhead costs can benefit a business.  The expense of these amenities increases as an organization's workforce grows. Without a physical location, significant savings are possible. 

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The potential recession will not only have an impact on organizations, but also on their employees. When working from home, employees can save money on gas and commuting, professional attire, and meals, among other things. The advantages of remote work extend beyond cost savings; workers have more time to rest without commuting, greater flexibility in their work schedules, and increased access to skilled team members from around the world. 

Employees want to work remotely and enjoy having the freedom to; flexible work arrangements (hybrid work or remote work) rank as one of the top three motivators for employees finding a new job and many employees opt to quit their jobs rather than return to the office. The remote work model gives employees the flexibility they are looking for, which reduces the rate of employee turnover. Hiring a new employee is more expensive than keeping an existing employee, so the remote work model saves organizations money by reducing the time, energy, and resources spent on recruiting and training. The cost of hiring a new employee can be three to four times an employee's annual salary, but with a flexible remote work model, employers can retain and attract quality talent while spending less money in the long run. 

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Although remote work is not feasible in many industries, for those who can shift to a remote environment, there are significant cost-cutting opportunities. A difficult undertaking, moving to remote work is ultimately rewarding, especially in terms of cost savings. Companies can prepare for the risk of a future recession by utilizing remote work to generate significant financial savings.