The Ups and Downs of Telecommuting

Editor's Note: This article introduces TheStreet.com's Home Front series, a collection of twice-weekly features that examines how American business, society and investing have changed in the post-Sept. 11 landscape.

Some days, it's tough to get up and go to work. For many, since Sept. 11, it has grown even tougher.

Whether it's contending with New York City mass-transit delays, D.C-area gridlock, a high view from an office window, worries about opening mail contaminated by anthrax or the pull of family responsibilities at home, many workers find telecommuting a solution to their troubles.

Currently, in the U.S., at least 16 million employees work at home at least one day a week, according to Minda Zetlin, author of Telecommuting for Dummies.

An Upward Trend

That number will increase, predicts Dr. Charles Grantham, whose forthcoming book about the psychology of the Internet is due next spring. According to Grantham, about 7.54% of the U.S. workforce telecommuted at the end of 2000. "I wouldn't be surprised to see that figure go over 12% or so by the second quarter of next year," he says. "If we have another major incident, though, all bets are off."

Like many others, Grantham marks his sense of history as pre- and post-Sept. 11. Before the terrorist attacks on the World Trade Center and the Pentagon, many employers struggling in a shaky economy cut back on perceived perks like alternative work options, he says. "After Sept. 11, what I've sensed is a sea-change kind of shift on the part of employees, especially those with young families who are questioning the wisdom of working in highly centralized urban areas," he explains.

Indeed, average workers now have a more convincing reason to discuss the option of telecommuting with their employers. Before Sept. 11, many employers considered the chance to work at home as a bonus to offer potential hires. Now, however, they're seeing it in a different light.

An increasing number of companies recognize the risks of putting their key employees in one place, and that may result in the growth of satellite offices and teleworking centers, according to June Langhoff, editor of ITAC Telework News, a monthly newsletter for telecommuters.

"We see the world as a more dangerous place than it was a month ago," says Zetlin. "Telecommuting is one part of the constellation of solutions to this problem. If applied correctly, telecommuting is a benefit to employers because it saves resources in the office. It frees up space and bandwidth, for example. And you get a more efficient and loyal employee in the process."

The Downside

But by no means is telecommuting a perfect solution.

For example, workers at M&R Capital Management in New York found themselves displaced after the World Trade Center collapse. The company's Fulton Street office didn't sustain serious structural damage, but its switching station was destroyed, leaving them temporarily without a viable telecommunications infrastructure. After working at home for a few days, the employees set up shop in a temporary downtown location until AT&T can provide them with a wireless solution.

Says the firm's president, John Maloney, "While we will go back to our traditional office setting, it made me think more in terms of the desirability of decentralizing." But Maloney harbors no illusions of creating a virtual office setting, where staffers sign on each day from their living rooms. "You need face time with people to go over issues and problems, and you don't get that when they're not in one piece of real estate," he says. "To create a successful work environment, people have to see each other and bond to get things done."

Even the most adamant telecommuting advocates admit that the lifestyle can be somewhat of a hindrance, especially in light of the nation's stressful times.

"At the moment, the biggest problem for telecommuters is the danger of getting isolated," says Zetlin. "Maybe some people feel motivated to telecommute now because they're afraid to go out the front door. I hope people telecommute for the right reasons -- to be more efficient or more in touch with their families -- not because it's frightening to go into the office. The events of the past month are traumatic for every American, and the only way to get over that is to be with other people."

Many telecommuters offer anecdotal evidence of experiencing a bout of isolation. For example, Andrea Della Monica, a publication editor for the Uniformed Firefighters Association in New York City, who works at home about 80% of the time, says, "I'm happy to have the luxury of working at home instead of commuting and [feeling the] fear of being in an area that's been targeted. I feel safer, but not necessarily happier."

If you've decided to fire up the laptop from home instead of making the trek into the office, not only do you have to deal with your technological connection to the office, but you also need to be prepared to feel disconnected.

"Sure, I find that I feel more isolated when working from home," says John Czeban, a senior account manager at Nortel who works from home a few days a month. "I make a special point of calling people within my organization -- colleagues who have become friends -- to see what's happening. It's my way of trying to virtually carry on the water-cooler conversations."

Investing Implications

If you're inclined to play the telecommuting game from the bleachers as an investor, pick carefully. Although most Internet service providers will see a boost in business from this trend, it'll be incremental at best, says Maloney of M&R Capital, which has about $300 million under management. "There's possibly a much bigger plus for niche players that target that market in software," he adds.

Want names? Cody Willard, president of TelEconomics Consulting and a frequent TSC contributor, says the best picks are in niches. "Software vendors and enablers of VPN [virtual private networks, which allow employees to make a secure connection to their employers' local-area network] are probably the purest play on the telecommuting trend," he says. "Checkpoint CHKP is the clear leader in VPN software, although the stock is mighty expensive. Cisco CSCO also makes good VPN software, but it's a very insignificant part of its business."

Of course, a larger picture emerges, too.

"The events of the past weeks, beginning with Sept. 11, are going to create a climate in which all business leaders are going to fundamentally sit back and address how we organize what we do -- the time and space in which we do that," Grantham says. "I think the driver for the future in companies will be those who invest more and more in social capital. I'm going to invest in companies that do this, not those who think this is business as usual."

Certainly, very little since Sept. 11 feels like business as usual.