Gen AI effect: Big telcos cut another 85K jobs in 2022

Gen AI effect: Big telcos cut another 85K jobs in 2022

According to a report of Light Reading by Iain Morris,  In the telecom sector, BT boss Philip Jansen reckons AI will claim about 10,000 jobs at his company by the end of the decade, around a tenth of the current total. Numerous telcos are experimenting with the latest AI advances to reduce manual effort and further shrink the workforce. Chatbots have already claimed thousands of customer-service jobs. Highly automated networks can run with minimal intervention by humans. Network operating centers that previously hummed with human activity are turning eerily quiet.

Since 2015, the industry’s biggest telcos in North America and Western Europe have been cutting jobs without replacing them. The trend was maintained last year, when the 20 Tier 1 telcos regularly tracked by Light Reading slashed their combined headcount by nearly 85,000 jobs, according to publicly available data.

Those latest reductions mean the workforce across these 20 companies has shrunk by around 384,000 jobs since 2015, more than a fifth of the total back then. Cuts have been driven by efforts to protect margins, pay off debts and offload underperforming or non-core assets as telcos struggle to increase their sales. Across these various companies, reported revenues have fallen from about $761 billion in 2015 to less than $725 billion last year, when converted into US dollars at today’s exchange rate.

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Divestments mean not all these jobs have been scrapped. In some instances, people have merely found they are working for a different employer (initially, at least). This would have been the case following the merger between Vodafone’s huge Indian subsidiary and Idea Cellular, for example. The sale of towers by companies such as Spain’s Telefónica will have entailed the transfer of employees as well as concrete and steel. AT&T’s decision to spin off its WarnerMedia business, now combined in a joint venture with Discovery, explains much of the net reduction in headcount last year.

On the IT and networks side, some operators have been able to cut technical jobs by moving resources into the public cloud, relying on AWS, Google Cloud or Microsoft Azure to operate and maintain workloads. While very few operators have entrusted their network functions to public cloud providers, many are investing in software that can anticipate and address looming faults before technicians are needed. With intent-based networking, someone can specify a single and simple objective and leave automated software systems to handle all the complicated underlying work previously done by human programmers. A self-driving network may be easier to build than a self-driving car.

BT’s Jansen anticipates up to 55,000 job reductions by the end of the decade. Most will occur as the UK operator switches off older networks and systems and finishes rolling out its nationwide full-fiber network, a replacement for the copper lines that have lasted a century. If his forecast is accurate, then telcos in other countries upgrading to fiber while ditching legacy platforms will presumably be able to cut thousands of jobs as well.

So far, this relentless pruning has not always brought much, if any, improvement in basic productivity measures. Sales per employee at BT fell from about $285,000 in 2016 to roughly $268,000 last year as headline annual revenues sank by $4.3 billion over this period. Telefónica’s per-employee revenues dropped from more than $408,000 in 2016 to less than $386,000 in 2022. Only in the less competitive US market have all operators enjoyed substantial gains. Each one also generates considerably more in per-employee revenues than any of its European peers. Verizon, the leader for this metric, made $1.17 million last year.

Source: lightreading

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April 2024

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