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The online electrical goods seller AO World has revealed it is outsourcing up to 200 UK call centre roles to South Africa blaming rising labour costs, as it handed £20m to shareholders.
As the retailer reported a jump in profits, it said it was shifting the majority of call centre jobs overseas “in response to ongoing inflationary cost pressures, and particularly rising employment costs”. It expects to save about £4m a year as a result of the change.
AO said on Wednesday that pre-tax profits had jumped 145% to £50.5m in the year to 31 March, and it was handing £20m in special payments to shareholders.
About 150 roles in phone sales and enquiries have already been switched from AO’s call centre in Bolton to South Africa over the last 12 to 18 months. A further 50 are expected to go, with roles switching as people in the UK choose to leave rather than through redundancies.
More than 100 further roles, handling more complex customer queries, will remain in the UK. AO said its overall employee numbers fell by 340 to 2,800 in the year as it made efficiencies across the business.
John Roberts, the founder and chief executive of AO, said the shift was necessary to keep prices lower for shoppers and “costs walk into the business on legs and this government keeps making those costs even higher and even less flexible”.
“What government is doing is accelerating the cost equation at the same time as technology is accelerating its capability and cost [reduction],” he said.
Overall unemployment in Britain is at its highest level since the outbreak of the Covid pandemic, with young people bearing the brunt as businesses warn about the impact of tax increases and an economic downturn from the Iran war.
Roberts said the drop in youth employment was “nothing to do with AI and robotics” and “about terrible government decisions”, which had made it more expensive and risky to hire inexperienced workers with new measures such as more rights from the first day of employment.
He echoed criticism from Simon Wolfson, the boss of the fashion retailer Next, of new rules, due to come in next year, under which employers will have to offer staff on zero hours or “short hours” contracts, including agency workers, a minimum number of hours each week based on their regular working hours.
The rules would make it difficult to take on temporary staff during busy periods such as Black Friday and Christmas as employers could have to offer those workers similar hours in the slow January period, Roberts suggested.
However, Roberts said a fifth of AO’s workforce was under 25 and he had no plans to scale back apprenticeship programmes.
The company, founded by Roberts after a £1 bet in a Bolton pub in 2000, grew rapidly by selling household appliances online. However, it suffered after problems with international expansion and a post-pandemic slump in trade. Last year, it bought the resale specialist MusicMagpie and it recently launched a dedicated mobile phone selling site.
Roberts said the group now had “the strongest balance sheet in our history. And all delivered against a backdrop of rising costs.”
AO said sales rose 11.4% to nearly £1.3bn in the year and had continued well with a 17% surge in TV sales in May as households prepared to watch the men’s football World Cup for which both England and Scotland have qualified.
AO also said it had carried out “a small-scale, exploratory trial during the year to test the use of robotics within our warehousing operations”. It said early results “are encouraging” and it was now beginning to do further tests in its live operations.
AO said it was examining the use of more automation amid “inflationary pressures arising from changes to national insurance and the national minimum wage in April 2025 had a material impact on operating costs of about £8.5m across the group year on year”.
The discloses by AO come amid rising concern about youth employment as technology including robotics and AI replaces some entry-level jobs.
