Is it cheaper—and ultimately more profitable—to employ someone working from home or sitting in an office? The answer is more complicated than simply comparing salaries or office rent. Profitability depends on at least four variables: how much an employee produces, how much it costs to provide their workplace, how likely they are to leave, and how effectively the company can recruit the people it needs.
A growing body of research from Stanford University, Harvard, the National Bureau of Economic Research (NBER), the OECD, Nature, and the U.S. Bureau of Labor Statistics provides enough data to start putting numbers behind the debate.
And the numbers vary enormously. In controlled studies, working from home has produced results ranging from an 18% productivity decline to a 13% productivity increase. A newer study found a 10% increase. Hybrid work, meanwhile, has produced essentially no measurable productivity penalty while reducing employee departures by 33%.
Perhaps the most commercially interesting finding arrived in 2026: researchers found that bringing fully remote employees into an office only one day per month generated enough productivity and retention improvements to produce an estimated benefit-cost ratio of approximately 5:1.
So which model actually makes more money?
The research provides some strikingly different results depending on the type of work being performed.
| Research finding | Remote/hybrid effect |
| Ctrip randomized experiment | +13% productivity working from home |
| Ctrip after employees could choose location | +22% productivity gain |
| Ctrip employee attrition | ~50% lower |
| Turkey call-centre study | +10% remote productivity |
| Graduate share in Turkey study | +14% without higher wages |
| India data-entry randomized trial | –18% WFH productivity |
| Fortune 500 call-centre study | Remote workers originally handled 12% fewer calls/hour |
| Trip.com hybrid experiment | No significant performance loss |
| Trip.com hybrid attrition | –33% |
| Monthly-office-day experiment | +7.8% calls/hour |
| Monthly-office-day attrition | –~33% |
| Monthly-office-day benefit-cost ratio | ~5:1 |
| Average commuting time saved on a homeworking day | 72 minutes |
| Commuting time saving allocated back to work | 40% |
| Average value employees place on 2–3 WFH days | ~5% of salary |
| BLS: +1 pp remote working | +0.05 pp TFP growth |
| BLS: +1 pp remote working | –0.10 pp unit labour-cost growth |
| BLS: +1 pp remote working | –0.38 pp office-cost growth |
These numbers immediately reveal something important. No universal productivity premium is associated with either the home or the office. The economic advantage depends heavily on the type of employee, the type of task, and how remote work is organized.
One of the best-known experiments was conducted by Stanford researchers at Chinese travel company Ctrip. The company employed approximately 16,000 people and randomly assigned eligible call-center workers either to work from home or remain in the office for nine months. The home workers produced 13% more output.
That gain had two components. Around 9 percentage points came from employees working more minutes during their shifts because they took fewer breaks and sick days.
Another 4 percentage points came from employees processing more calls per minute, which researchers linked partly to the quieter home environment.
Employee turnover also fell by approximately 50%. Then something even more interesting happened. After the experiment, Ctrip allowed employees to choose whether they wanted to work from home or return to the office.
More than half changed their original working arrangement. Once employees had sorted themselves into the environment they preferred, the measured productivity advantage of homeworking increased from 13% to approximately 22%.
That suggests an important profitability factor companies sometimes overlook: The most productive workplace may not be the same for every employee.
A newer NBER study published in 2025 examined a large call center in Turkey after it shifted to fully remote work. Researchers found that workforce productivity increased by 10%.
Remote employees completed calls faster, with the researchers again pointing to the quieter home environment as one explanation. But there was another economic advantage.
Going remote allowed the company to recruit from smaller towns, rural locations, and demographic groups with lower labor-force participation. As a result, the share of university graduates employed by the company increased by 14% without increasing wages.
From a profitability perspective, this is potentially as significant as the productivity result. Remote work did not merely change where existing employees performed their jobs. It changed the company's available labor market.
The case for remote work becomes much less straightforward when looking at another randomized controlled trial. Researchers studying data-entry employees in Chennai, India randomly assigned workers to either home or office environments.
Employees working from home were 18% less productive. Approximately two-thirds of the productivity difference appeared immediately. The remainder developed over time because office workers learned faster.
Even more surprisingly, employees who actually preferred working from home experienced particularly large productivity losses when doing so. Workers who preferred WFH were about 27% less productive at home than in the office, compared with a 13% reduction among workers who preferred office work. This provides an important counterweight to the Ctrip findings.
Homeworking can produce a double-digit productivity gain in one workplace and a double-digit loss in another.
Research published in the American Economic Journal: Applied Economics examined call-center operations at a Fortune 500 company. Before COVID-19, employees working remotely handled approximately 12% fewer calls per hour than employees based on site.
When office closures forced everyone to work remotely, part of the difference disappeared. However, an approximately 8% productivity difference remained between employees who had originally selected remote jobs and those originally hired into office positions.
The researchers concluded that savings from lower turnover and office rent could offset the direct productivity disadvantage of remote work—but not necessarily the cost of attracting less productive workers into remote positions.
This introduces yet another variable into the profitability equation:
Who applies for the job can matter almost as much as where the job is performed.
The clearest evidence in favor of hybrid work comes from another randomized controlled trial involving Trip.com. Researchers followed 1,612 engineers, marketing employees and finance professionals.
One group continued working in the office five days a week. The other worked from home two days a week and went to the office three. The result? There was no significant difference in performance ratings. Promotions did not decrease measurably.
Software engineers did not produce less code. Yet employee attrition dropped from 7.2% to 4.8%. That is a reduction of 2.4 percentage points, or approximately 33% relative to the office-only group. For profitability, that difference matters enormously.
Trip.com estimated that replacing an employee cost around $20,000 in recruitment and training.
Consider a hypothetical company with 1,000 employees experiencing the same turnover rates found in the experiment.
Under the office model:
Under the hybrid model:
Difference: 24 fewer employees leaving over six months
At $20,000 per replacement: 24 × $20,000 = $480,000
So the hybrid organization would save approximately:
A simple annualized extrapolation would be:
$960,000 per 1,000 employees per year
However, that annual figure should be treated as an illustrative extrapolation rather than a measured result because the experiment itself measured the relevant attrition difference over six months.
More importantly, this calculation includes zero office-space savings. It includes zero energy savings. It includes zero commuting effects.
And it assumes zero productivity advantage for hybrid employees. The economic gain comes almost entirely from retaining more workers.
Another large international NBER study covering workers in 27 countries provides a different way to quantify the value of remote work.
Researchers asked employees to place a monetary value on working from home.
On average, workers valued the ability to work from home two or three days per week at approximately 5% of their salary.
Consider an employee earning €50,000.
Five percent of their salary is:
For someone earning €70,000:
At €100,000:
This does not mean employers can automatically cut salaries by 5%.
But economically, it means flexibility functions partly like a non-cash employment benefit.
For a company competing for workers, the ability to offer hybrid work can therefore carry considerable recruitment value without appearing on the salary line of the P&L.
Other Harvard-linked research also found that 21% of workers would accept a pay reduction greater than 10% in exchange for retaining the ability to work remotely, although the median teleworkable employee was not willing to sacrifice compensation.
Time provides another measurable economic benefit.
Researchers examining workers in 27 countries calculated that employees save an average of 72 minutes every day they work from home by eliminating their commute.
But employees do not use all 72 minutes for leisure.
Approximately 40% of the saved commuting time is reallocated to work.
That equals:
72 × 40% = 28.8 minutes
of additional work-related time for every homeworking day.
For an employee working remotely two days per week:
28.8 × 2 = 57.6 additional minutes per week
Across 50 working weeks:
57.6 × 50 = 2,880 minutes
or approximately:
48 additional hours per year
That is roughly six eight-hour working days of time redirected towards work.
Again, this should not automatically be interpreted as six additional days of productive output. But it illustrates why commuting time is economically relevant when comparing home and office work.
The U.S. Bureau of Labor Statistics examined the relationship between remote working and productivity across 61 private-sector industries.
Its findings are particularly useful because they consider not just labour productivity but the broader combination of inputs required to generate output.
After accounting for pre-pandemic productivity trends, a one-percentage-point increase in remote workers was associated with approximately 0.05 percentage points higher total-factor-productivity growth.
The cost effects were even more interesting.
Every one-percentage-point increase in remote working was associated with approximately:
–0.10 percentage points in unit labour-cost growth
–0.27 percentage points in unit capital-cost growth
–0.18 percentage points in unit energy-cost growth
–0.16 percentage points in unit materials-cost growth
–0.20 percentage points in unit services-cost growth
and approximately:
–0.38 percentage points in unit office-building-cost growth.
These are industry-level statistical associations rather than proof that each percentage point of remote working directly causes an equivalent cost reduction.
Nevertheless, the pattern is notable.
Industries where remote working expanded more tended to experience slower growth in multiple categories of business cost.
Real-world property data helps put the office component into perspective.
The UK Crown Prosecution Service reported £33.1 million in annual estate running costs in its 2025–26 property plan.
The organization had approximately 7,240 full-time-equivalent employees and 3,900 workstations.
That equates to roughly:
£4,572 in annual property running costs per employee
while providing only:
0.54 physical workstations per employee.
This is not directly transferable to a private company, but it demonstrates how hybrid working can fundamentally change the economics of office capacity.
Instead of requiring:
1 employee = 1 desk
the CPS operates at approximately:
1 employee = 0.54 desks
In another UK government example, an independent review calculated that the IOPC's Canary Wharf office cost approximately £7,428 per FTE per year.
At actual average attendance, however, the effective cost per occupied desk rose above £56,000 per year because so much space was unused.
Underutilized office space can therefore become extraordinarily expensive.
The office-cost argument is particularly relevant in expensive European cities.
JLL reported that prime Madrid office rents reached approximately:
€45/m²/month
by the second quarter of 2026.
For comparison, the UK central government office estate reported average space utilization of approximately:
7.2 m² per FTE
in 2024–25.
Using those figures purely as an illustrative scenario:
7.2 m² × €45 × 12 months = €3,888
That represents approximately €3,888 of prime annual rent per employee, before service charges, electricity, cleaning, furniture, security, insurance, IT infrastructure and other workplace costs.
For 1,000 workers:
€3.89 million per year
in illustrative rent alone.
Again, this is not a market-wide employer average: it combines a prime Madrid rental benchmark with a public-sector office-space benchmark simply to demonstrate the scale of the property variable.
Despite the positive examples, Stanford researchers reviewing the wider evidence estimate that fully remote work is approximately 10% less productive than fully in-person work on average.
The researchers identify communication difficulties, weaker mentoring, company culture and motivation among the likely reasons.
But their economic conclusion is particularly important.
They argue that the cost savings from fully remote work—especially office-space savings and access to lower-cost global talent—can be larger than the productivity loss.
That distinction is central to the profitability question.
Imagine that an office worker produces €100 of economic output at a cost of €80.
Profit contribution:
€20
Suppose moving the job remotely reduces output by 10%:
€90 output
But employment and infrastructure costs fall from €80 to €65.
Profit contribution becomes:
€25
The employee is now less productive but more profitable.
This is only an illustrative example, but it demonstrates why productivity statistics alone cannot answer the remote-work profitability question.
Physical offices are not simply an expense.
They can generate productive interactions.
A major Microsoft study examining communication patterns among 61,182 employees found that company-wide remote work made collaboration networks more static and siloed.
Employees developed fewer connections between different parts of the organization and shifted from synchronous communication towards more asynchronous communication.
Another recent study of software engineers found that physical proximity to teammates increased coding feedback by 18.3% and improved code quality.
The gains were particularly concentrated among younger and less-experienced employees.
But proximity also imposed a cost: experienced engineers produced less code when sitting near colleagues because some of their time was effectively being transferred into helping others.
From an organizational perspective, that may still be profitable.
The senior engineer produces less today, but the junior engineer becomes better tomorrow.
This type of knowledge transfer is extremely difficult to capture in conventional productivity statistics.
Perhaps the most interesting recent experiment was published by the NBER in June 2026.
Researchers randomly divided 248 fully remote customer-service employees into two groups.
One remained fully remote.
The second group came into the office together just:
one day per month.
The results were surprisingly large.
Employees attending the monthly office day eventually handled:
7.8% more calls per hour.
They also spent:
36 additional minutes communicating with colleagues
during the week after attending the office.
Workers randomly seated next to each other were:
11 percentage points more likely to communicate afterwards.
And employee attrition fell by approximately:
one-third.
Researchers calculated that the combined productivity and retention gains generated an estimated:
5:1 benefit-cost ratio.
That means approximately $5 of economic benefit for every $1 spent implementing the coordinated monthly office day in that particular setting.
This result changes the remote-versus-office question considerably.
The optimum arrangement may not require choosing between zero office days and five office days.
In some organizations, the economic value of an office may be concentrated into a surprisingly small number of strategically coordinated interactions.
The OECD surveyed managers and workers across 25 countries and found that both groups generally viewed teleworking positively.
But neither extreme emerged as the preferred model.
The estimated ideal was approximately:
2–3 remote days per week.
The OECD describes the relationship as an inverted U.
At low levels of remote work, employees gain from reduced commuting, fewer distractions and greater autonomy.
As remote intensity becomes very high, however, communication and knowledge flows begin deteriorating.
The highest efficiency may therefore occur somewhere between the two extremes.
Interestingly, OECD managers estimated that approximately 42% of the workforce should have teleworking arrangements, while only around 5% should work completely from home.
Consider a knowledge-based company employing 1,000 people.
Assume that its workforce behaves similarly to the employees in the Trip.com hybrid experiment.
Moving from five office days to two home days produces:
Measured productivity effect: approximately 0%
Turnover reduction: approximately 33%
Six-month departures avoided: approximately 24
Replacement cost per employee: $20,000
Result:
$480,000 saved every six months
or an annualized theoretical figure of:
$960,000
before property savings.
Now assume each employee values hybrid working at approximately 5% of salary, consistent with the international NBER research.
At an average €60,000 salary:
€60,000 × 5% = €3,000
of perceived annual flexibility value per worker.
Across 1,000 workers:
€3 million of employee-perceived benefit
without necessarily adding €3 million to payroll.
Finally, two remote days each week generate approximately:
48 hours of commuting time annually redirected towards work per employee
using the international commuting study's averages.
Across 1,000 employees:
approximately 48,000 hours per year.
Not every one of those hours converts directly into saleable output, so it would be incorrect to add them mechanically to profit.
But together, the numbers show why hybrid work can have a powerful economic proposition even when measured employee productivity remains exactly the same.
The evidence increasingly suggests that asking whether “home” or “office” is more profitable is the wrong binary question.
Fully remote work can generate impressive savings and, in some jobs, productivity increases of 10–22%.
But other controlled experiments have found homeworking productivity losses reaching 18%.
Full-time office work can improve learning, mentoring and cross-team knowledge transfer, yet companies pay substantially more property and commuting-related costs to maintain it.
Hybrid work currently produces the most consistent economic evidence.
One of the strongest randomized studies found:
0% meaningful productivity loss
combined with:
33% lower employee attrition.
International research suggests employees value that flexibility at approximately:
5% of salary.
OECD research suggests the optimum is around:
2–3 remote days per week.
And the newest randomized experiment suggests that even predominantly remote organizations may capture substantial office benefits through coordinated physical interaction as infrequent as:
one day per month
with researchers calculating a:
~5:1 benefit-cost ratio.
The emerging economic argument is therefore not that the office has become unnecessary.
It is that companies may need considerably less office than they once assumed.
For many knowledge businesses, the most profitable model may be one in which employees perform concentration-heavy individual work remotely while offices are deliberately used for the activities where physical proximity produces the greatest return: collaboration, training, mentoring, innovation and relationship building.
In other words, the financially relevant question may no longer be:
“Are home workers or office workers more productive?”
It may be:
“How many office days does a company actually need to pay for in order to capture the economic benefits of being together?”
Current experimental evidence increasingly suggests that the answer may be considerably fewer than five.
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