(Bloomberg) — AI’s decimation of call center jobs has begun. <\/p>\n
Most Read from Bloomberg <\/p>\n
Companies ranging from the Commonwealth Bank of Australia and Microsoft Corp. to Uber Technologies Inc. and Hyatt Hotels Corp. are using automated chat and phone systems to handle work that previously required humans. In some cases, they’ve already wiped out sizable chunks of their customer service operations, together representing thousands of workers. <\/p>\n
The specter of automation has long loomed over the call center industry, which employs millions worldwide from the US to India to the Philippines. But until recently, generative artificial intelligence wasn’t good enough to move the needle. <\/p>\n
Now, AI advancements \u2014 and pressure on executives to show they’re embracing the new technology \u2014 have prompted corporations to deploy the tools more widely. <\/p>\n
Customer service employment in the US is declining and will likely continue to do so as more tasks are automated, Forrester analyst Kate Leggett wrote in a report earlier this year. While it’s impossible to determine the future job losses, she estimated that almost half of customer service roles will be impacted by 2030. Globally, the steepest job cuts are expected to hit countries like the Philippines, where many Western companies have outsourced their most easily automated work. <\/p>\n
Salespeople at multiple tech companies told Bloomberg that they routinely pitch call center AI tools as a way of lowering labor costs, undercutting a common industry claim that AI is primarily a way to help workers become more productive rather than kill their jobs. (Many of those who spoke for this story were granted anonymity to candidly discuss a sensitive topic.) <\/p>\n
Commonwealth Bank of Australia, the nation’s largest lender, has shed hundreds of workers from its chat support line as it wove AI into the system, according to people familiar with the work. This amounted to tens of millions of dollars in savings per year, one of the people said. <\/p>\n
Many of those who lost their jobs were contractors who worked at a call center outside Johannesburg operated by the South African company Nutun. Multiple current or former workers described anxiety in the ranks as AI began to handle an increasing share of their work and the outsourcing company saw its contract with the bank reduced. A Commonwealth Bank spokesperson said the lender has added more than 140 roles at Australia-based call centers over the past six months. Nutun didn’t respond to requests for comment. <\/p>\n
Microsoft is both one of the largest vendors and adopters of customer service automation tools. This has helped the software giant trim its customer service workforce \u2014 a mix of contractors and full-time staff \u2014 from about 50,000 to 40,000 in recent years, according to a person familiar with the operations. <\/p>\n
“If something happened with little Johnny’s Xbox in the middle of the night, we can now solve that with AI,” Judson Althoff, who runs Microsoft’s sales and service operations, said in an interview. Althoff said in April that AI is saving the company about $750 million per year in customer service costs. More complex problems still require human support, but the company is constantly expanding what can be fixed automatically, he said in the interview. <\/p>\n
Bloomberg reported last week that Uber cut 10% of jobs in its customer service operations as part of a broader effort to “embrace artificial intelligence.” Today, Uber pushes users to submit support requests through their apps, where they’re met with an AI chatbot. <\/p>\n
At most large companies, armies of call center workers spend their days answering routine customer requests either verbally or via chat. What is my account balance? Can I change my flight time? How late are you open tonight? Jobs focused on this simplest aspect of customer support \u2014 often called tier one \u2014 are on the chopping block, while companies are expected to retain workers trained to handle more complex interactions with important customers. <\/p>\n
Automating some simple customer requests such as reservation modifications or receipt requests is helping Hyatt reduce its spending on customer service, said Pat Nestor, who runs the company’s AI and data analytics operation. Cutting costs “is clearly a driver of an initiative like this,” Nestor said. Like many companies, the hotel chain is leaning on a third-party vendor for its AI, in this case a startup called Sierra, which was co-founded in 2023 by Bret Taylor, who is chairman of OpenAI. <\/p>\n
Last year, the hotel chain fired 30% of its in-house customer support staff for the Americas, citing the “evolving nature of guest inquiries and shifting business needs,” according to Hotel Dive. A spokesperson said this was unrelated to the deployment of AI. <\/p>\n
In some cases, companies say they have avoided mass firings of customer service workers replaced by artificial intelligence. After using AI to reduce call volume by about two-thirds, Brinks Home security trimmed its call center workforce from about 800 to 400, according to Chief Information Officer Philip Kolterman. Some workers were moved to other divisions, he said, while natural attrition took care of most of the other staff reductions. <\/p>\n
Tier-one support is often provided by outsourcing companies, which have begun to sound the alarm about how AI may cut into their business. Teleperformance SE handles some of Brink’s customer support out of a site in Jamaica. That firm, as well as outsourcing peers like Concentrix Corp. and TTEC Holdings Inc., have seen their shares steeply drop. <\/p>\n
“Some lower complexity services currently performed by our game-changers have been, and may continue to be, replaced by tools deployed by clients,” Concentrix said in its most recent annual report. “If we do not execute our technology strategy effectively, this could result in loss of revenue and reduced margins.” <\/p>\n
Many customer service contract workers are based in countries with high English proficiency but low salaries, particularly India and the Philippines. The latter has continued to report job growth from call centers, but is rushing to adapt to the AI era. <\/p>\n
“I wouldn’t want to be an investor in India or the Philippines right now, because that’s where we are seeing the biggest cost savings from AI,” said Ryan Teeples, chief strategy officer at 1-800Accountant, a tax service aimed at small businesses that’s planning to use fewer overseas call center workers. <\/p>\n
The company employs about 500 year-round staff and typically adds a few hundred contractors during tax season to handle increased customer service and data entry needs. But next year, Teeples expects to spend 50% less on outsourced staff. With the help of tools like Salesforce’s Agentforce, 1-800Accountant has automated simple tasks like checking the status of a return. <\/p>\n
Teeples said the company will use the cost savings to hire more accountants, largely in the US. That’s no consolation to call center workers around the world. <\/p>\n
–With assistance from Natalie Lung. <\/p>\n
Most Read from Bloomberg Businessweek <\/p>\n
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