News: Telecoms giant BT to cut up to 55,000 jobs and replace a fifth with AI

BT plans to reduce its workforce by 55,000 jobs by the end of the 2030 fiscal year as part of its cost-cutting measures. Approximately 10,000 of these positions will be replaced by artificial intelligence (AI) as the company aims to streamline operations.

The telecoms giant aims to decrease its workforce by 40% in response to challenges posed by rising inflation and energy prices. CEO Philip Jansen expressed optimism about the future of BT, stating that it will become a leaner business.

The reduction in jobs will primarily come from a decrease in the number of engineers as BT's full-fibre rollout concludes and older copper networks are phased out. Additionally, automation and AI will play a significant role, with approximately 10,000 roles being replaced by AI technology, particularly in the customer service division.

Mr. Jansen highlighted the potential benefits of AI, stating that it could result in substantial cost savings compared to the company's previous IT systems. The adoption of AI is expected to make BT more efficient and financially advantageous.

However, the CEO emphasized that technology will not completely replace humans and assured that people will not feel like they are interacting with robots.

BT has announced significant job cuts, which account for over 40% of its workforce, as part of its efforts to counter the effects of rising inflation. In November, BT increased its cost-saving target to £3 billion by the end of 2025. CEO Mr. Jansen warned that more job cuts would follow, but the exact number was not disclosed.

The announcement was made alongside BT's report of a 12% decline in pre-tax profits, amounting to £1.7 billion, largely due to increased network build costs. Revenue also slipped 1% to £20.7 billion, with growth in the Openreach broadband division offset by declines in other units. Cash flow decreased 5% to £1.3 billion, at the lower end of guidance, attributed to higher capital expenditure. As a result, BT's shares dropped by as much as 9%.

The magnitude of the redundancies reflects the challenges faced by Mr. Jansen, who has already accelerated job cuts through compulsory redundancies. BT had previously indicated that deep cuts would be made in its Openreach division as the full-fiber rollout progresses, reducing the need for thousands of engineers and maintenance staff.

BT has already deployed full-fiber broadband to over 10 million homes and aims to reach 25 million by the end of 2026. However, industry experts have expressed surprise and concern about the extent of the new job cuts, questioning the timing of the announcement, particularly as Mr. Jansen is expected to step down within the next year. The cuts may also reignite tensions with unions, as 40,000 workers went on strike last year over pay disputes.

Prospect, a union representing BT managers, expressed deep concerns about the cost-cutting plans, while the Communication Workers Union urged BT to prioritize retaining direct labor jobs and consider reductions among subcontractors and through natural attrition.

BT will need to convince investors that it can overcome the challenges of rising costs, fend off competition from rivals like Virgin Media O2 and smaller full-fiber broadband companies, and address customer losses and revenue declines in its struggling enterprise division.