1. It’s basically a raise.  Asking employees to work from home means they make more money.  How?  Lower commuting costs is the most obvious.  Then there’s the home office tax deduction (where most of the money is).  Lastly, there’s the ancillary stuff associated with daily office work — the morning coffee, the nice clothes (regularly dry cleaned), the lunches, and the downtown after-work drinks.  All this adds up to more money in the employee’s pocket.
2. It’s like giving employees 2 more days every year … of life.  People spend, on average, about an hour a day commuting.  Giving that back is significant.  And what’s more, because the employee has been given this new perk, he’s more likely to just give that time back to the company.  Loyalty is about relationships, not salaries.

In the age of cell phones and email, virtual offices are not a technological hurdle.  They are a management hurdle.  Can you manage a virtual staff?  Maybe not, but it’s a hell of a lot easier to manage employees that are happy, and a virtual office gives them plenty of reason to smile.