The Economic Impact of Telecommuting: A Look at the Benefits and Challenges


The idea of telecommuting first began in the 1970s. But back then, most people still clocked into a physical office. Today, it’s become increasingly popular for both employers and employees. The ability to work from anywhere has paved the way for a new and modern working landscape. Companies need to be ready to innovate and adapt. Both of these abilities are key to the success of any organization. Due to changes wrought by economic pressure, companies that could do both helped fuel telecommuting as a work option for many companies.

So what is the economic impact of telecommuting? Telecommuting creates several benefits that a company can exploit to fuel long-term success. Some benefits include an increase in productivity and a decrease in employee churn. However, there are also some challenges that a company must overcome to take advantage of these benefits.

The workplace environment will continue to evolve as technology advances, and we find new ways to create value for our company. It’s vital to fully understand what telecommuting means and the benefits and challenges it can bring. Keep reading for an in-depth assessment of the effects of telecommuting and whether your company should shift to it.

What is Telecommuting?

A research studyOpens in a new tab. defines telecommuting as working from home or an alternate office location. It involves communicating with the office using digital tools. However, managerial tasks such as note-keeping and reading still fall under telecommuting, even when not achieved electronically. 

While telecommuting has been available for years, it recently became popular due to pressure from many economic factors, the most notable being COVID. Ingrid FalipOpens in a new tab., a financial advisor, shares this golden nugget about the effect of COVID in the workplace:

“COVID drove a big pull forward in software and technology demand with remote work and social distancing hastening an already in place shift to telecommuting. Today, companies are more likely to cut technology spend[ing] to offset higher oil/gas, travel costs, wages, and other factors,”

When it comes to telecommuting, access to the internet is essential. A 2020 studyOpens in a new tab. surveyed 53 countries and found that their economic development plays a big part in whether a company will accept work from anywhere. Any company should assess whether its industry is ready to integrate remote working into its current work setup. We have written an article, “How to Build a Steering Committee to Transition to Work From Anywhere”Opens in a new tab. to help you learn more about how you can shift from an older working setup to a new one.

Benefits of Telecommuting 

Most people, especially employees, prefer working from anywhere. According to a 2020 Stanford articleOpens in a new tab., work-from-home employees make up around two-thirds of U.S. economic activity. It’s not just a gimmick, either. Remote work has many economic benefits:

  • Increased work productivity
  • Employee flexibility
  • Less travel fatigue 
  • Higher rates of employee retention and satisfaction 
  • Lower operational costs
  • Better work-life balance

Increased work productivity and flexibility

Employees are more productive when they can work from anywhere. Telecommuting reduces the chances of “restarting” when working, which happens more often with in-office interruptions. One of the biggest contributors to productivity is that workers can design their home office as they see fit. That lets them create a comfortable environment while still preparing it for efficiency. Comfortable and happy people tend to be more effective. Being able to work on their own time can also boost team morale.

A flexible work schedule is a cherry on top regarding telecommuting. StudiesOpens in a new tab. have also shown that workers increase their output and productivity when working from home. They can effectively divide their work day around deep periods of work when they can focus and periods of needed rest. 

Less travel fatigue 

People who can work from anywhere experience less travel fatigue. Commuting is stressful — no one enjoys waiting in line, being stuck in traffic, or standing in a crowded train. It also removes the need for employees to own cars or find parking spaces.

Working from anywhere lets anyone turn on their devices and connect remotely to finish their tasks. Meetings can also be held online or through calls, which lessens the need for in-person office meetings.

As an added benefit, removing the need to travel also helps the environment. Letting people work from home reduces fuel consumption, potentially reducing their carbon footprint.

Higher rates of employee retention and satisfaction 

Telecommuting can help decrease employee churn in the company. Offering remote work options to employees based on their needs and preference can motivate them to stay longer in the company. 64% of the global workforce answered in a surveyOpens in a new tab. that they would consider quitting their current jobs if their employers wanted to push through an in-person office setup. 

The lifeblood of a company is its people. Joseph MayansOpens in a new tab., director of U.S. Economics at Experian, highlights the need to focus on employee retention in a post-pandemic workplace in his statement:

“The labor shortage issue and the remote work/flexibility issue are very closely intertwined and will need to be worked out in the coming months if businesses want to find enough qualified workers,”

Reducing employee churn is a significant benefit to any company. To help you reduce your workforce turnover, we suggest looking at our article on how WFA affects employee retention, “Will Work From Anywhere be an Effective Employee Retention Strategy in 2023?”Opens in a new tab.

Lower operational costs

Employers shifting from an office to telecommuting will also decrease operational costs. Telecommuting can help employers save money on office maintenance and energy consumption. Moving office work to a digital space also lessens or removes the need for office supplies like pens and paper.

Better work-life balance

Results from a 2019 studyOpens in a new tab. show that telecommuting has an overall positive influence on having a work-life balance and life satisfaction. By creating the ideal workplace where you are, you can enhance and enrich your professional and personal life. Employees and employers can take the initiative on how they spend their time and energy for work and rest. 

Good leadership also affects your team’s work-life balance. Kassie WhitakerOpens in a new tab., an account manager at PaymentCloud, gives this golden nugget about the role of leadership in a better work-life balance:

“Leadership plays a critical role in creating a culture of work-life balance that can lead to increased productivity and success. As a leader, it’s your responsibility to prioritize this balance and create an environment where your team can thrive,”

Challenges of Telecommuting

You may encounter a few road bumps as you move your workforce toward telecommuting. But don’t worry: you can prepare for these challenges, and there are many ways to resolve them as they come up. Here are some challenges you need to prepare for when implementing telecommuting for your company:

  • Stress from feeling isolated at home
  • Changes in office expenses
  • Reduced team cohesion and collaboration
  • Increased need for data security 
  • Work inequality 

Stress from feeling isolated at home

Flourishing under telecommuting is not always guaranteed. Some people are not suitable for a remote workplace. Employees may need help to engage with the company emotionally if they work remotely. 

Socializing online can help solve this, but some people can find it hard to connect with their team members. A poor working environment can also cause employees to feel isolated and excluded. When they cannot access collaborative learning, their careers can take a hit and stagnate.

For some people, telecommuting can also negatively affect their mental health. A recent surveyOpens in a new tab. found that 85% of employees experienced heightened anxiety and stress levels after shifting to remote work. A company should consider its employees’ and employers’ long-term health before committing to telecommuting.

Raj KarunakaranOpens in a new tab., Global H.R. Solutions Leader, shares the importance of mental health for employees in his post,

“Understanding the importance of employee mental health and supporting good mental health of employees, especially telecommuting workforce, should be a top priority for organizations,”

Prioritizing your employee’s mental health is a must to have a productive workplace. We have written an article to help you, titled “Prioritizing Employee Safety and Mental Health in the Post-Pandemic Workplace”.Opens in a new tab.

Changes in office equipment expenses

Changing to telecommuting requires ensuring your team has the best technologicalOpens in a new tab. tools and a stable internet connection. You should also train employees to use telecommuting tools such as meeting and team collaboration apps.

This new requirement will mean that an employer must determine the budget for the new tools and training. An employer may have to provide company devices to their workforce or pay for a stable connection. Alternatively, it could benefit your company to increase employee wages so that they can provide for their own devices and connection or give them an allowance for those purposes.

Reduced team cohesion and collaboration

Brainstorming and innovation can look different in the digital space. For some employees, in-person team meetings can be more productive and satisfying. The lack of face-to-face interaction can be challenging when managing team members. 

Digital communication might also be a roadblock to effective teamwork. A studyOpens in a new tab. found that miscommunication is one of the disadvantages of telecommuting. Errors often occur due to long internet meetings and an excessive focus on the communication process rather than the content itself.

It’s best to lead by example — even when working remotely. Hollyann MortonOpens in a new tab., Senior Training Leader & Program Manager, shares this important piece of advice on how to start team collaboration, 

“Don’t just permit your team to disagree with you, insist on and facilitate the diversion of ideas. Doing so will lead to more independent thought, increased innovation, stronger trust, and team collaborations,”

Increased need for data security 

A data breach exposes a company’s sensitive information. It’s more likely for a data breach to happen if you have more remote workers. When all your workers are online, it is easy to make a mistake at the wrong time,

A recent studyOpens in a new tab. found that telecommuting affects the cyber risk profile of enterprises worldwide. Technology can smoothen workflow when companies face economic pressure, but it also makes them more prone to digital risks.

Remote work relies a lot on data management and distribution of data across the internet. Taking extra steps to protect your company’s data will be worth the investment. An excellent place to start is by encouraging digital literacy in your teams. Literacy can cover basic troubleshooting, online security, and best practices when working with online technology. It will also help to implement company policies that help protect your digital infrastructure.

We’ve written an article to help you get started on bringing your company up to speed regarding digital literacy. Read it here, “Digital Literacy and Cybersecurity: Protecting Yourself and Your Company’s Data Online.”

Work inequality 

Telecommuting is part of the new normal. It began as a necessity due to economic constraints, but today it’s a long-term work option for many employees. However, telecommuting has different needs that not all workers can meet.

A recent studyOpens in a new tab. revealed that economic geography

 significantly affects the remote work experience. Not all workers can telecommute to work for various reasons, one of them being industry type. Race and gender can also play a role and create inequalities within an industry.

Telecommuting might only be for some, but it is possible to make it more inclusive for every workforce member. Before committing to telecommuting, companies should assess whether it’s feasible to resolve their challenges. While a company’s employees create success for the company, the company has to be able to support its people.

To Wrap Up

Telecommuting is growing in momentum in the current corporate landscape. It has fully transformed the work-life phenomena. There are many benefits and challenges to telecommuting, but with the right company structures and policies, it can positively impact the workplace and the overall economy.

Telecommuting is growing in momentum in the current working landscape. It has changed how we approach work, home, and life. It can create several benefits for companies that can take advantage of its opportunities. However, it also creates a new set of challenges to overcome. Telecommuting can positively affect the workplace and the economy as long as companies prepare for these challenges.

It is up to clear and strong leadership to steer the company towards positive telecommuting. Emily-Rose Perez-FrageroOpens in a new tab., Co-Founder & COO at Marble LDN, Marble Private & Marble Music, sums it up best in her post, 

“With 1 in 4 professionals in the U.K. now working from home, it’s a whole new ball game for businesses looking to engage and motivate their employees.

The benefits of a hybrid working culture are plain to see, but when it comes to all-important vision setting, business leaders need to work harder to reach out to their teams in new, innovative ways, cut through the digital noise, and ensure growth plans and objectives are communicated in a memorable and energizing way.”

Note that your company can make a partial change over time. You can make the transition gradual or consider developing a hybrid workplace. Hybrid setups use telecommuting, in-person, and other options for work so that you can have a test run of the structure. Whatever you decide, it’s best to take the extra steps to ensure that telecommuting is a success for your company.

To get started on a hybrid workplace, we recommend reading our article, “Hybrid Workplace: What It Is, And Why Now Is the Time.”

 Related Questions

  1. How can I tell if an employee is a good candidate for telecommuting?

Paying attention to your employee’s skills and scope of responsibilities can help you determine whether they are suitable for remote work. They should be motivated to accomplish work independently. You can determine this by asking questions about how they deal with failure and manage work-related stress.

They should also have great prioritization skills and problem-solving abilities. These qualities can help you determine whether they can handle the workload from remote work. Finally, having good communication skills is a must when thinking about whether an employee will flourish in telecommuting. They should be able to express their needs and questions to their manager for smooth online collaboration.

  1. What are the ways I can boost my team’s productivity remotely?

Your team’s productivity doesn’t need to take a hit when you shift your workplace online. There are many ways to make sure your employees remain productive even when they’re working remotely. Keep in mind that telecommuting encourages autonomy, so make sure that your leadership style doesn’t stifle your team members when working.

You can start by setting clear expectations for each quarter and keeping everyone in the loop about their responsibilities. You should also be open to any inquiries they may have about their task. Make sure that your communication lanes are accessible to everyone on the team. You should also track everyone’s performance to ensure that they are working productively. For more insight into how you can measure productivity, we have written an in-depth article Opens in a new tab.you can read and implement to further boost productivity in your team. 

FAQs Covered in this Article

Q: What is telecommuting?

A: Telecommuting is a work arrangement where employees perform their job duties from a remote location, typically from home, using technology to stay connected with their colleagues and workplace.

Q: What are the main benefits of telecommuting for employees?

A: The main benefits for employees include increased flexibility, improved work-life balance, reduced commute time and costs, and the ability to work in a comfortable environment.

Q: How does telecommuting benefit employers and the economy?

A: Telecommuting benefits employers through increased productivity, reduced overhead costs, access to a larger talent pool, and improved employee retention. The economy benefits from reduced congestion, lower emissions, and increased opportunities for regional development.

Q: What are some challenges associated with telecommuting?

A: Challenges of telecommuting include potential isolation and disconnection from colleagues, difficulties in collaboration and communication, maintaining a healthy work-life balance, and ensuring data security and privacy.

Q: How can organizations overcome the challenges of telecommuting?

A: Organizations can overcome challenges by implementing clear communication protocols, fostering a strong remote work culture, offering support and resources for remote workers, and investing in appropriate technology and security measures.

Q: What types of jobs are best suited for telecommuting?

A: Jobs that require minimal face-to-face interaction, can be performed independently, and rely on technology and digital tools are generally well-suited for telecommuting.

Q: How can I determine if telecommuting is the right choice for my organization?

A: To determine if telecommuting is right for your organization, consider factors such as the nature of your employees’ work, the potential benefits and challenges, and the tools and resources required to support a remote workforce. Conducting a pilot program or surveying employees can also provide valuable insights.

Steve Todd

Steve Todd, founder of Open Sourced Workplace and is a recognized thought leader in workplace strategy and the future of work. With a passion for work from anywhere, Steve has successfully implemented transformative strategies that enhance productivity and employee satisfaction. Through Open Sourced Workplace, he fosters collaboration among HR, facilities management, technology, and real estate professionals, providing valuable insights and resources. As a speaker and contributor to various publications, Steve remains dedicated to staying at the forefront of workplace innovation, helping organizations thrive in today's dynamic work environment.

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