The boss of AO World has revealed hundreds of jobs at the firm are being offshored to South Africa as he took aim at government measures for sending wage bills soaring for British businesses.
John Roberts, founder and chief executive of the electricals chain, told the Press Association the group had already offshored around 150 sales roles to South Africa.
The move has saved it around £2 million so far and is eventually set to trim annual costs by £4 million.
Around another 50 workers are due to be recruited in South Africa by March next year as the firm aims for the bulk of its customer contact operations to be based overseas by next March to make savings in the face of soaring labour costs.
AO World said it had also taken “targeted pricing” action amid efforts to offset cost pressures and was trialling the use of robotics and artificial intelligence (AI) in warehouses to help drive efficiencies.
The use of AI in its operations will eventually replace some roles, but Mr Roberts said it was too early to say how many would be affected.
He said up to 800 roles across the firm could eventually be automated through technology, though he stressed the group was not planning to use AI to replace workers on this scale.
Mr Roberts also vowed not to make any staff redundant amid the offshoring and robotics changes, and is instead not replacing some workers in the UK when they leave.
AO World said it is forking out an extra £8.5 million in costs a year from the Government’s move in April last year to hike higher national insurance contributions, alongside above-inflation minimum wage rises.
Mr Roberts told the PA: “The brutal truth is that of course these roles could have been in the UK.
“When you make these staff ever more expensive and ever more inflexible, that’s what businesses are going to do.
“We’ve got a political class that doesn’t understand business. They live in an economic fantasy land.”
Cost cutting efforts helped it shrug off wider cost pressures to post a record annual profit haul.
It saw pre-tax profits more than double to a record-breaking £50.5 million for the year to March 31, up 145.1%, as revenues jumped 11.4%.
On an underlying basis, pre-tax profits lifted 16.1%.
The group unveiled a returns boost for investors, with plans for another £20 million through a £10 million special dividend payout and a new share buyback programme of £10 million.
Mr Roberts said the profit boost was “delivered against a backdrop of rising costs”.
The firm stuck by profit expectations for the year ahead, but cautioned the “external environment remains uncertain, with ongoing geopolitical volatility and continued inflationary pressures impacting both consumers and input costs across the economy”.
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