Telstra and AT&T Shed Thousands of Contact Center Jobs

Australia’s largest telco announced Tuesday it would cut 10,000 contract jobs over the next two years, including outsourced customer service and call center staff. The company’s plans to slash a quarter of its 40,000-odd contracted workforce is part of a cost-cutting frenzy as it faces intense competition in the sector and pressure from investors to reduce labor costs by 30 percent.

Telstra and its industry peers have been squeezed by the rollout of the National Broadband Network, which sets the wholesale prices telecommunications companies must pay to access the service, and then set their own retail prices to sell to customers. Half of Australian households are now connected to NBN.

CEO Andrew Penn is confident the workforce cutbacks will not compromise the customer experience.

“I completely understand the concerns (around service) and I admit that we don’t get it right every time,” Penn said at a Morgan Stanley event in Sydney. “But we have reduced the number of calls coming into our call centers from 50 million three years ago to less than 30 million this year.”

Most companies have prioritized call reduction for reasons good and bad – some cite cost-cutting (the average call costs $11 in labor terms), others insist they’re deferring to customer channel preference and improving the customer experience by providing self-service alternatives to digital-first consumers.

Shrinking call volume a priority for businesses

In a 2016 survey by McKinsey, 57 percent of customer care executives said shrinking call volume was their number one priority for the next five years, while four out of five executives ranked digital solutions the most important operational call center investment. These include websites, chatbots, mobile apps and AI-powered bots that simulate human conversation, while improving existing self-service portals and phone IVRs.

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Telstra isn’t the only telco to shed contact center jobs en masse. In February, AT&T came under fire for shuttering a 150-seat call center in Syracuse, NY, before announcing closures of three additional call centers in Meriden, CT.

Workers were told their jobs would be shifted to Tennessee and Georgia despite AT&T’s nearly $20 billion tax break from the new Tax Cuts and Jobs Act of 2017 and CEO Randall Stephenson’s remarks that every $1 billion in tax savings for the company creates “about 7000 good jobs for the middle class.”

While self-service benefits both customers and businesses – such as self-scheduling and 24/7, always-on engagement – there’s a ceiling on how much we can automate.

As thought leaders say, shifting to digital channels means customers call as a last resort, generally with complex questions that require great investigation and troubleshooting, or to vent their frustration from trying self-service and failing to find an answer. As Blake Morgan writes in Forbes, it creates a  situation where “the call center becomes an escalation channel.”

Contact centers do more than just take calls

What many thought leaders forget, however, is that contact center agents do more than answer calls. The phone channel alone is used for sales, customer retention, consultations and even client onboarding. At the National Suicide Lifeline, highly trained agents field more than 2 million calls a year to provide emotional support and refer callers to intervention programs and mental health services.

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When Banner Health introduced an IVR system to automatically route callers to patient rooms instead of going through an operator, call volume fell by 40 percent but customer support agents spent more time on the phone assuming a “caregiver role” for customers whose loved ones were undergoing medical treatment.

As organizations like the American Cancer Society shift to a 100 percent remote agent workforce or tinker with a hybrid model, shrinking real estate footprints for contact centers doesn’t mean the customer support function is outmoded by AI.

Data from the Bureau of Labor Statistics predicts call center jobs will grow by 5 percent (as fast as average) between 2016-2026, continuing a years-long upward trend.

Arguably, as businesses introduce customer support functions in a greater variety of channels, offer asynchronous messaging, and proactively reach out through AI-powered bots, businesses are positioned to receive an even greater number of customer inquiries, even if many of them are handled via chatbot and spread across a range of non phone-based channels.

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And while it might appear as if chatbot-mediated interactions occur independently of human involvement, on the backend someone is supervising the knowledge base that powers the bot, training the AI’s natural language processing capabilities to understand a larger array of expressions and enunciations, and harvesting voice of customer data from those interactions. At the very least, the most cutting-edge, customer-centric companies have their work cut out for them.

The end goal for businesses: cost-saving and customer support

Ultimately, all businesses seek to control costs, and if they can find a way to reduce contact center headcount while maintaining the same quality of customer support, they will. Many have done so.

While it’s clear that AT&T and Telstra did so purely for cost-cutting reasons without necessarily having an alternative customer support infrastructure in place that’s equivalent to phone support, use cases for the phone vary from business to business, and some won’t be able to do away with it as easily as they would like.