Hybrid work: A multi-billion dollar productivity catalyst for businesses

Organisations that empower employees to work from local offices and flexible workspaces as part of hybrid working arrangements stand to increase productivity by 11% over the next five years, according to a recent report by the International Workplace Group (IWG) and global engineering consultancy Arup.

The IWG Hybrid Working Productivity Report highlighted that a key driver of this productivity increase is the reduction in commuting time, allowing employees to reallocate up to 40% of the travel time saved to work-related tasks. In fact, the study found that 67% more employees reported “excellent” productivity levels in flexible workspaces compared to those working from home. If employees spend half their time in flexible local workspaces or offices, it could unlock 170 extra productive hours per employee annually.

Mark Dixon, CEO and Founder of IWG, commented, “When organisations give employees the freedom to work closer to home in well-equipped spaces without the need for longer daily commutes, the results are clear: better focus, fewer distractions and improved work-life balance, all of which translate into meaningful productivity gains. These benefits, when scaled, have the potential to deliver billions in value to economies around the world.”

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In the US, hybrid working could contribute as much as US$566 billion to the economy by 2045 through higher productivity, reduced employee turnover, and lower real estate costs. Similarly, the UK economy could see a 12% rise in productivity, adding £46 billion in value annually by 2045.

The Asia-Pacific region is already experiencing these shifts. In Singapore, flexible work arrangements are crucial to attracting and retaining top talent amid growing competition. Research by IWG and Development Economics estimated that employees working closer to home could save up to S$39,400 annually in commuting-related costs. Singapore’s Urban Redevelopment Authority is supporting this trend by encouraging decentralised business hubs in residential areas such as Bishan and Woodlands through its Draft Master Plan 2025.

Dr Issac Lim, Social Scientist and Founder of Anthro Insights, concluded, “To truly see productivity gains, organisations must go beyond simply offering flexibility; they need to implement it thoughtfully. This starts with understanding the nature of the work and designing hybrid arrangements that accommodate both business and employee needs. Equally important is investing in the right technology and equipping managers to lead by outcomes. When hybrid work is structured and intentional, that’s when the real productivity benefits emerge.”