New Delhi: Hybrid working is emerging as a key strategy for businesses to attract and retain skilled employees, with improved staff retention alone potentially generating productivity gains worth $204.7 billion in the US and £10.8 billion in the UK over five years, according to a new analysis by International Workplace Group (IWG) and Arup.
The analysis highlights how flexible working arrangements can improve employee retention, broaden recruitment opportunities and preserve institutional knowledge, translating into significant economic benefits for businesses.
According to IWG research, 81% of chief human resources officers (CHROs) consider hybrid working critical to retaining top talent, while 86% identify flexible working as the most sought-after benefit among prospective employees.
The preference for flexibility is also evident in India, where 88% of employers consider the ability to work remotely important for employee retention, according to the Cisco Global Hybrid Work Study 2025.
The analysis found that 72% of business leaders consider hybrid or flexible working essential to attracting younger leaders. Hybrid working was also identified as the most common strategy for competing for top technology talent by 37% of business leaders, ahead of competitive pay at 35%.
Furthermore, 78% of respondents believe organisations offering hybrid or flexible working have a clear advantage over those that do not.
The report identified employee retention as the largest potential contributor to productivity gains in both the US and the UK. Reducing staff turnover could help businesses avoid annual losses of up to $40.9 billion in gross value added (GVA) in the US and £2.2 billion in the UK.
Employee departures can result in the loss of institutional knowledge, experience and productivity, while also increasing recruitment and onboarding costs.
The analysis estimated that reducing knowledge-related disruption could generate productivity gains of $65.5 billion in the US and £5.7 billion in the UK over five years.
Improved talent attraction could contribute another $98.3 billion in the US and £6.5 billion in the UK over the same period. Recruitment and onboarding efficiencies could generate an additional $9.4 billion and £0.6 billion, respectively.
The findings come amid continuing concerns over employee attrition in India. According to the Deloitte India Talent Outlook 2026, the country’s attrition rate stood at 17.6% in 2025.
Artificial intelligence (AI) could further strengthen the benefits of flexible working, the analysis suggested. Around 80% of chief executive officers said combining AI with hybrid working increases employee productivity.
Meanwhile, approximately 60% of workers in the US and 68% in the UK said AI was already improving their experience of hybrid working.
Christian Schmitz, chief executive officer of IWG, said retaining experienced employees, attracting talent from a wider pool and providing greater flexibility could significantly improve business productivity.
He added that AI and flexible working arrangements could help companies build more agile and productive organisations.
Harsh Lambah, country head of India at IWG, said workplace flexibility was becoming an important consideration for businesses competing for specialised talent.
He said greater choice in where and how employees work could help employers attract and retain skilled workers while building more productive and resilient organisations.
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