AO World shifts more call-centre work overseas

What's happened

AO World has outsourced further UK call-centre roles to South Africa, with about 50 more roles moving after 150 already relocated. The company says this is part of inflation-driven cost savings as profits rise; the majority of customer-contact work is expected to be overseas by next March. The firm is testing robotics and AI in its warehousing to boost efficiency, and notes national insurance and minimum wage changes last year increased operating costs by 8.5m.

What's behind the headline?

Analysis

• AO World’s offshoring strategy is a direct response to rising UK labour costs, intensified by changes to national insurance and minimum wage. This reflects a broader trend in which retailers seek offshore efficiency to protect margins.
• The move risks reputational and customer-service impacts if UK-based roles are heavily reduced, even as the company argues that many UK roles remain and that no redundancies are planned while departures are voluntary.
• The potential automation push could shift the job mix from entry-level to tech-enabled roles, impacting the labor market and training needs for workers. The company sees a long-term cost advantage, but execution and public sentiment will matter.
• Investors are being attracted by a strong balance sheet and a special dividend programme, though external geopolitical and inflation pressures remain a backdrop to earnings.

How we got here

AO World has been restructuring to offset rising labour costs. It has already moved around 150 call-centre roles to South Africa over 12–18 months, with a further 50 expected. Despite this, more than 100 roles handling complex queries remain in the UK. The group reports record profits for the year to March 31, driven by a revenue rise of 11.4% to about £1.3bn and a 145% increase in pre-tax profits to £50.5m. The company is testing robotics in warehousing and expects automation to help contain costs amid high inflation and wage growth.

Our analysis

The Guardian reports AO World has outsourced around 150 roles to South Africa with a plan for a further 50, citing CEO John Roberts. The Independent Business notes the cost savings of about £2m so far and outlines the broader offshoring and AI/robotics strategy. Bloomberg confirms the South Africa call centre savings of about £2m with plans to move more work overseas by year-end. Direct quotes: The Guardian: “strongest balance sheet in our history… rising costs.” Independent Business: “The brutal truth is that of course these roles could have been in the UK.” Bloomberg: “savings are expected to reach £4m.”

Go deeper

• Will AO World maintain any UK-based customer-service roles as automation expands?
• How might offshoring affect local jobs in Bolton and broader UK retail workforces?
• What other cost-saving steps is AO World taking beyond call-centre outsourcing?

More on these topics

• South Africa - Country in Southern Africa

  South Africa, officially the Republic of South Africa, is the southernmost country in Africa. With over 59 million people, it is the world's 24th-most populous nation and covers an area of 1,221,037 square kilometres.

• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.

• AO World - UK electrical retailer

  AO World plc, trading as ao.com, is an electrical retailer based in Bolton, England. It operates in the United Kingdom (ao.com), and operated in Germany (ao.de) until July 2022 and in the Netherlands (ao.nl) until November 2019, specialising in household.