In 2020 remote work transformed the way businesses operated forever. And although managing virtual teams was already increasing before the pandemic, now it has become the norm. Especially in the IT industry, companies started realizing that they could access a more specialized talent pool by hiring remote developers than by hiring locally. Hiring remote workers benefits companies in many ways, from lowering costs to retaining employees. However, is it worth it for all companies? What are the main advantages of hiring a virtual workforce?
I started working in the remote recruitment business more than 20 years ago. First, I thought outsourcing was the remedy for all the problems or difficulties that hiring locally had. Later I discovered that outsourcing was not the remedy, but it sometimes prejudiced companies even more. The best solution was and will always be hiring remote employees, or in other words, offshoring talent.
From the smallest garage startups to the largest enterprise, hiring remote workers helps save money. And no, not just because you can access accessible talent but because there are many other advantages that sooner or later reflect on your profit.
9 Economic Benefits of Hiring Remote Workers
A recent Gartner survey revealed that 80% of company leaders plan to allow employees to work remotely at least part-time after the pandemic, 47% will allow remote work permanently.
Remote work isn’t going anywhere. By now, most companies are figuring out what their workplace structure will be once the pandemic is over; whether it’s a hybrid model, onsite, or full-time remote.
Let’s evaluate all the benefits and how hiring remote employees can help your company save money.
1. The Most Obvious: Save Real Estate Costs
In many parts of the country, the rising cost of real estate is a growing concern. Even regions with higher-than-average median incomes—such as Silicon Valley and Redmond, WA—are experiencing the pressures of rising real estate. Ultimately, this affects companies and employees and represents a significant opportunity for employers to save money.
According to one report, businesses save as much as $10,000 in real estate costs per year per remote employee.
2. It Reduces Turnover
Another area where remote working can result in significant cost savings is the expense of training employees. According to the Center for American Progress, employee turnover represents an often overlooked, yet significant, expense.
After comparing 30 case studies from 11 research papers, the Center concluded that the cost of replacing a worker is, on average, approximately one-fifth of that worker’s annual salary. The turnover cost is disproportionately higher for highly skilled labor, with some positions costing as much as 213% of the individual’s gross annual income.
While job turnover is a major concern, the direct correlation to remote work may not be immediately obvious. However, a study by Stanford University showed that employees who worked from home reported greater job satisfaction. Even more telling, as a result of the increased job satisfaction, companies experienced significantly less turnover among remote workers, avoiding the costly process of training new personnel.
In fact, according to GlobalWorkplaceAnalytics.com, 95% of companies polled reported that telework had a high impact on employee retention, while two-thirds of employees said they would take another job if it would help ease their commute. As a result, companies with a healthy work-from-home policy in place reap savings from reduced turnover and have greater chances of attracting top talent.
3. Time Is Money: Less Unscheduled Absences
According to the above study by GlobalWorkPlaceAnalytics.com, it’s estimated that unscheduled absences cost employers an average of $1,800 per employee per year or an estimated $300 billion a year for US companies.
This is another area where telecommuters represent significant savings, as companies with a telework program saw a 63% drop in unscheduled absences. Just as important, employees can often return to work faster following medical issues and can handle many things—such as doctor appointments—without taking an entire day off of work.
When employees are sick, working from home helps keep them from infecting others and causing large portions of the company’s workforce to go absent on sick leave.
4. You Have Access to a Specialized and Affordable Talent Pool
Another way virtual workers can save companies significant amounts of money is by opening the door to a much wider talent pool. Hiring remotely enables your business to hire employees that live in cities where the cost of living is lower.
It’s worth highlighting that whenever you’re looking for remote talent, you don’t go to the other extreme of saying, “This is awesome, I can hire 10 employees for the price of 2 in my country and build an empire” because usually, this never works out. Believe me; I learned from my experience that the best way to get specialized and elite talent is by paying employees for what they’re worth, and that is a mix between skills, education, experience, and location.
However, one of the wonders of hiring remotely is that you still get talented and passionate employees that don’t charge exorbitant salaries.
For example, the average salary of a software engineer in Silicon Valley ranges between $88,000 and $152,000 (PayScale). In contrast, the median salary for a software developer in Seattle is $131,135, while in Portland, a developer can expect to make $105,000 in Denver. Moving farther East, the median salary drops to a mere $98.500 (Glassdoor), SD. Go even farther east—across the pond to Europe—and the median salary for developers in Russia, Ukraine, or Romania drops to $20,000 to $70,000.
5. Better Service With Less Overtime Thanks to Time Zone Differences
In addition to improved diversity among the company’s talent pool, hiring telecommuters opens the door for companies to offer their customers better service with less cost.
For example, if a company on the East Coast hires employees on the West Coast, they can offer telephone support for an additional three hours a day–for a full 12-hour day—without paying overtime. This has the benefit of not only decreasing cost but improving the customer service and support experience.
6. Improved Efficiency
There is a direct boost to productivity and efficiency that often goes hand-in-hand with remote workers. CoSo Cloud conducted a Remote Collaborative Worker Survey to study the impacts of remote work on both employees and employers. The study showed that 77% reported greater productivity, with 30% of participants accomplishing more in less time than employees who worked remotely at least part-time.
At the end of the study, CoSo CEO Michael Fitzpatrick concluded that “there are significant benefits to be gained by both remote workers and their employers with off-site employees motivated to work harder and more efficiently to protect both the personal and professional benefits of working remotely. Even the personal benefits workers experience can be viewed as employer benefits since workers tend to be happier, less stressed out, and healthier, thereby bringing down the costs of turnover, absenteeism, lower productivity, and other issues.”
7. No More Commute & Travel Expenses
Hiring remote employees helps both companies and employees save money. For instance, one of the reasons why employees don’t want to return to the office is the commute. According to FlexJobs, 84% of employees want to continue working remotely to avoid commuting. They can save up to $5,000 per year by preventing commuting, according to Census research.
Additionally, to commute, another benefit of hiring remote workers is that you save travel expenses. When remote work was not popular, many companies had to pay constant travel tickets to employees to have meetings, go to events, or simply work on projects. Now, with tools and technology, traveling is not necessary. Plus, it helps companies save approximately $949 per person on average.
8. Companies Can Build More Diverse Teams
Managing remote teams often means working with employees from all kinds of backgrounds. And although cultural differences can be challenging, they can also be a great opportunity for companies to innovate and increase their creativity levels. Which, in return, can positively impact a company’s profit.
A Boston Consulting Group study found out that diversity has a direct effect on a company’s revenue. The study analyzed 1700 companies of various industries and sizes across 8 different countries. The results? Companies that have more diverse management teams have 19% higher revenue due to innovation.
9. Become More Competitive in the Job Market
One strategy to become competitive is to pay high salaries and provide employees with economic benefits such as discounts in specific stores or gym passes, among other things. However, when you’re open to hiring remote workers, you automatically become more attractive to possible candidates.
After the pandemic, thousands of people are continually looking for ways to work from home. In some cases, their company has extended remote work policies, built a hybrid model, or shifted to full-time remote. But in many cases, remote work is not an option. And according to surveys, employees are even willing to take pay cuts to work remotely.
A survey from insurance company Breeze found that out of 1,000 Americans, 65% said they’d be willing to take a 5% pay cut to have the opportunity to work full-time remotely.
Hire Remote Workers Fast with a Remote Recruitment Agency
The evidence is clear: remote workers represent significant savings through lowered costs, increased productivity, and higher job satisfaction. If your company is interested in hiring remote IT employees but has no idea where to start, contact us.
At DistantJob as a remote recruitment agency, we can advise your company on the best hiring strategies, and additionally, we can help you hire the exact talent you need. No hassle, no unnecessary expenses, and no waste of time. All this process takes only two weeks! Just describe your ideal candidate, we take you through our process, and in a couple of days, you’ll have a crafted list of potential candidates. And if you’re worried about the paperwork and legal aspects, don’t worry; we got it covered too.