Online electricals group AO World has revealed the bulk of its customer contact operations will be offshored by next March as it looks to cut costs in the face of a soaring wage bill.
The firm said it had already outsourced most of its inbound sales operations to a South African firm over the past year to March, which has saved it around £2 million so far and is set to trim annual costs by £4 million.
It will continue recruiting outside of the UK for these roles, which it said is “expected to result in the majority of our customer engagement operations being based overseas by the end of the financial year”.
Cost Pressures and Record Profits
AO World said it forked 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 on top of above-inflation minimum wage rises.
It said it had also taken “targeted pricing” action amid efforts to offset cost increases and was trialling the use of robotics in warehouses to help drive efficiencies.
The 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%.
Investor Returns and Outlook
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.
AO World founder and chief executive John 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”.
