As businesses soon enter the third year since the global Coronavirus pandemic erupted, remote workspaces and mechanisms become ever-so-evident in day-to-day life. Many companies had to fully reevaluate their structures and processes to give their workers a safe environment to complete their tasks – and what better place than the comfort of their own homes?
The shift to remote work, although welcomed with open arms by some businesses, posed huge threats to others, who found it hard to manage people from a distance and saw their work processes as unimplementable in remote conditions. This led to a distrust of higher management, lower productivity and evidently losses in revenue.
But there is a bright side to all this. Now that more and more companies are implementing remote working practices, suffering businesses have a lot of knowledge to feast on. What’s more, there are lots of businesses that focus on improving hiring and onboarding practices for their clients. The same goes for companies advising businesses on how to increase their profits.
Currently, with more than 89% of European companies rethinking hybrid work, it is evident that such a working style has benefited more than simply safety for workers. Access to a larger pool of potential candidates, lower overhead and Increased employee satisfaction and productivity, are just some of the benefits that businesses enjoy as they implement more remote practices into their work life.
But what do statistics have to say about increasing profits and revenue for companies that choose remote over in-person work?
Why is remote work so popular?
Depends on who you ask. Employees will say they feel more satisfied, that their mood is alleviated and they find it easier to focus for longer periods of time as they ditch office spaces (as per this study). Companies, on the other hand, find other benefits in such work: one of them being profitability.
Profitability is a complex equation that involves looking not only at profits and losses but also at people and what motivates them to work. Yes, a person may drive profits, but if they feel fulfilled and motivated to work in a pleasant environment, their productivity will eminently rise – and with that, the company’s profits. Let’s examine this in more detail.
Increasing Profitability with Remote Hiring
When business owners and key executives think about increasing their profits through remote work and hiring they can usually think of just 1 or 2 ways this will affect the company’s profitability. In reality, however, there are more ways than one might think to increase your profits by switching to remote hiring and work.
In the next couple of paragraphs, we’ll take a look at 6 different aspects of the business that remote hiring and work can influence to increase the profits of a company. Let’s begin.
Access to a Larger Pool of Candidates and Salary Rates
One of the key points aspiring companies make when discussing remote work is that they generally have access to a larger pool of candidates. This allows them to choose the perfect person for the job without having to relocate them to the company office – they can do their work just as fine wherever they are.
There are also companies like RemoteMore that aid companies in their hiring processes. We provide a platform for companies and software professionals to meet and discuss opportunities hassle-free. Each worker points out their salary up-front, so recruiters have an easier time finding a worker that will fit their budget and has the appropriate skills. In exchange, companies can often find a great fit software developer or engineer for 2 times less than the average market rate. That of course translates into higher profits as software service companies get a higher profit margin and product companies cut their development costs.
Lower ongoing expenses
A study by Global Workplace Analytics estimated that a typical employer in the U.S. can save an average of $11,000 per half-time remote worker per year (and that’s with hybrid included). The primary savings come from lower real estate costs and better disaster preparedness. Remote work also eliminates overhead costs like lease expenses, office furnishings, utilities, insurance, supplies, upkeep and repair — fees that add up rather quickly.
Sun Microsystems pose a remarkable example of how a company can make significant savings and increase its profits with remote hiring and work. The company implemented a remote policy back in 2007. They calculated the setup saved the company $255 million in just four years. What’s more, Sunsystemsthis continues to bear the fruits of its telecommuting policy that saves 68 million each year.
Increased Productivity
A DataPost study estimated that “32.2% of managers report an increase in productivity following the 2020 shift to remote work” with 65% of employees reporting that “they are more productive at home than in a traditional office space”. And it makes sense – people work distraction-free and have more time they can allocate to work (sometimes even outside working hours). Employees feel better knowing they can switch cities or even in some instances countries whenever they like with their work remaining uninterrupted.
With studies indicating that remote employees are 47% more productive than in-office employees, just imagine the impact this may have on your business and its profits.
Faster and Easier Hiring
One of the best sides of remote work is that it optimises the hiring process by cutting up hiring costs. It also saves time and effort and cuts down the hiring time from several months to just a couple of weeks. With RemoteMore, for example, most companies can find and hire suitable candidates within as little as 2 weeks and cut their hiring costs by over 60% successfully increasing their profits.
Remote hiring options also drastically improve workers’ response rates. Some online hiring channels even provide opportunities for recruiters to identify if a candidate is available for a new job – e.g. LinkedIn ”Open to Work” hashtag. The disadvantage is that oftentimes candidates don’t put this hashtag on their profile for various reasons. So in most cases, you just need to contact somebody to know if they’re open to a new job (given they reply back).
Nevertheless, there are other platforms which can help you narrow down candidates even more precisely. For example, all of the active candidates on RemoteMore are open to new opportunities. That allows companies to achieve an average response rate of over 80% compared to the industry average of 35%. Also, it helps you narrow down your search to just the small percentage of software professionals (around 15%) that are actually looking for a job at any given moment.
Taxes and Social Security
Very often when companies hire people from abroad there are certain tax benefits – companies may have to pay lower taxes and social security. Especially if it’s a contract agreement in most cases you don’t have to pay taxes and social security at all. This “hidden” tax relief is a certain way to cut down hiring expenses and hire workers for a fraction of the total price of a homeland employee.
And once again, companies like RemoteMore can help with the legal and payroll part of the deal. We take care of everything and all you get at the end of the month is one easy-to-pay invoice.
Reduced Turnover and Absenteeism
Retention rates for employees also constitute a big part of the expenses companies have to consider when hiring a new employee. And companies want to keep their employees around – as hiring costs are generally much, much higher than retention costs.
According to a report by SHRM – Society for Human Resource Management, the average cost of losing an employee to a company is 6 to 9 months of the employee’s salary. For example, the cost to replace an employee who makes $60,000 per year would be between $30,000 and $45,000.
That is where remote work steps in as a certain way for companies to keep employees around and reduce the turnover rate.
Conclusion
Remote work provides numerous benefits both for companies and workers. Increased productivity, lower operational and hiring costs and higher retention rates result in higher profit margins for companies and lower product development costs (especially for service software and product software companies where demand for remote work is highest). With remote work opportunities becoming the “new normal”, companies have to reevaluate their practices and workspaces, so that they fit this new model of work.
The benefits from such work are more than simply providing employees with a chance to pick their location – they constitute a large portion of what makes workers satisfied with their work and what increases their productivity and retention rate. It allows companies to be in tune with current working trends and drastically improves their profitability through the factors that we mentioned above. Therefore, it is crucial that companies find a way to reach common ground with employees (especially millennials and Gen Z-ers) and improve their policies to increase their own profit margins and, consequently, revenues.
