The narrative of remote work rising to the occasion and saving the workforce from the pandemic is easy to sell. It paints a positive picture of a future where employees enjoy greater autonomy, flexibility, and favorable work-life balance. Yet companies are bound to be far more pragmatic when considering how they move forward with respect to remote working arrangements.

The cost will be a major factor in these decisions. It’s easy to compute the overhead for a traditional office, and easy to find ways to save. Getting bulk office hardware from a dealer such as Banner Solutions can net a significant discount. Likewise, ensuring that employees comply with workplace power-saving practices will drive down the energy bill.

Proponents of the home office will argue that these components of overhead won’t even be part of your calculations with a remote workforce. That may be true, but you can easily end up spending money on hidden and unexpected costs associated with remote work.

Cost-effectiveness at face value

How does remote work save money for employers? The exact answer really varies with each company. Rest assured, though, every person that no longer has to report to your office for duty is one less worker plugging in their laptop and other devices. It’s one less live body moving about and increasing the workload on your HVAC, grabbing snacks from the pantry, making coffee, and using the restroom.

For companies that provide transportation services or free parking, reducing the number of onsite staff can significantly slash fuel costs and real estate. And speaking of the latter, if you’re certain that your headcount will go down, it may be a chance to scout around for bargains on the commercial space listings. Why pay a premium when people don’t come to the office anymore?

Remote work also has some less obvious cost-saving opportunities for employers. Prior to the pandemic, surveys showed that 80% of employees would be more loyal to their companies if they had the option to work remotely. Considering the average cost of attrition, that’s a big incentive. On top of that, a quarter of those surveyed expressed willingness to take a 10-20% pay cut if employers allowed them to work from home.

Bracing for hidden costs

These areas where remote work can save money for employers are significant, measurable, and applicable to most companies. And if your calculations pit those cost savings against the amount you have to invest in infrastructure, it’s easy to conclude in favor.

But few companies have years of experience with remote work, so you’ll be learning on the go. And you’ll be encountering a lot of hidden or unexpected costs along the way.

Consider network security, for instance. It’s been widely reported that the pandemic-enforced shift towards remote work also coincided with a rise in cybercrime. Are you going to mitigate this risk by stepping up your IT investment, perhaps installing surveillance technology for each home workstation? Are your current collaboration tools secure enough? Will you be conducting cybersecurity training and refreshers for your employees?

Better security comes at a cost. But the risk of not investing in this area can be measured in the potential cost of damages from compromised data in the event of a breach.

There are other issues with remote work that you might not anticipate but could work against your bottom line over time. These include the potential decline in employee well-being from effects such as stress, depression, or fatigue, that are harder to monitor remotely and negatively impact productivity. And there’s the risk of losing employees anyway when they feel that career development opportunities are stalled due to a lack of face time with management.

A matter of reallocation

The closer you examine the potential costs of a remote workforce, the more readily you’ll realize that it’s still a largely unexplored and risky frontier. For this reason, McKinsey would only recommend full remote work to a very limited range of companies. The think tank predicts that most companies will end up with a hybrid of on-site and remote work.

When that happens, your money tends to simply get reallocated. The potential for cost savings gets trimmed down considerably. In fact, upfront costs involved in such a transition might invoke a short-term increase, with ROI coming in at least two years down the road.

You’re going to keep a physical office open and partly staffed, while also securing the infrastructure necessary to enable a select number of remote workers. That can drive up expenses. Even with pay cuts and better retention rates, savings can easily be offset by the cost of investing in workers’ development and well-being.

Companies shouldn’t rush into this transition. They need to spend time working out all the details and aim for a degree of hybridization that maximizes the benefits of remote and on-site work while minimizing costs.