
AO World boss John Roberts blamed rising employment taxes and minimum-wage increases for moving 150 sales roles to South Africa, with £4 million annualised savings expected.
AO World boss John Roberts blamed rising employment taxes and minimum-wage increases for the electricals retailer's decision to move sales roles to South Africa. The company has already offshored about 150 positions, saving £2 million, according to The Times. Roberts expects annualised savings to reach £4 million. A further 50 workers are expected to follow.
The Labour government raised employer National Insurance contributions in the Budget and increased the National Living Wage. For an online retailer like AO, which depends on inbound sales calls and post-sale support, those changes squeeze margins that are already thin in white-goods retail.
The arithmetic is straightforward for any retailer weighing the same trade-off. South African operating costs, including salaries and compliance, run well below the UK equivalent even after accounting for the infrastructure and time-zone coordination needed to run a remote centre. AO's move suggests the gap is now wide enough to outweigh the brand and quality-control risks of running a foreign sales desk.
AO is not alone. Currys and John Lewis have also shifted some customer-service roles offshore, typically to India or the Philippines. What makes AO's move stand out is the public attribution. Roberts is explicitly tying the offshoring to domestic policy, a signal that other finance directors may soon use the same argument internally.
The direct consequence for UK employment is clear. Retail call centres, which employ tens of thousands of relatively low-paid workers, become structurally less secure when the cost of keeping them onshore rises. The indirect consequence is harder to quantify. If the trend accelerates, the government may face a choice between tightening immigration rules for customer-service visas and accepting that some of the jobs it aimed to protect will simply migrate.
The company reports that early results from the South Africa team are comparable to UK performance, though the data covers only a short period. Treasury officials have said the Budget changes were designed to raise revenue, not to prompt offshoring.
The 50 additional roles AO plans to move are the next concrete point in this story. If they go ahead as scheduled, other mid-tier retailers will have a live case study to present to their own boards.
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