Several major organizations in the UK have announced plans to reduce their customer-facing workforces in the UK.
The businesses include retailer H&M, insurer Direct Line and international bank Santander, and they have put the job cuts down to cost cutting and changes in customer behavior. Insurer Direct Line also cited a loss of market share, revealing the number of policy holders it serves has declined by 400,000, around 11 percent of total business.
On November 11, retailer H&M announced 150 jobs would be lost when it closes a call center in Edinburgh. The reasons for the move include higher operational costs, changes in customer behavior and rising competition. The 150 employees who will lose their current jobs have been offered the option of a new role, “finding other employment” or voluntary redundancy, which is compensated by the company depending on length of service.
In a statement, H&M said: “We constantly evaluate how we operate to ensure that we deliver on our goals and contribute to the overall success of the company.
“Having looked into the scope of our customer service set-up, increased competition in the market, our customers changing behaviours and expectations and operational costs, we have made the difficult decision to proceed with the proposed closure of our customer service site in Edinburgh by the end of the year.”
On the same day, Direct Line said it had started consultations to reduce its 9,000-strong workforce by up to six percent (around 540 roles), although some of these include vacancies it will no longer look to fill. In total, the insurer hopes to save £50 million in 2025 in response to losing 11 percent of its 3.05 million customers.
Chief executive Adam Winslow said: “We are in the early stages of a significant turnaround and our third-quarter trading is not yet fully reflective of the actions we have taken.”
Last month, Santander said more than 1,400 jobs would be lost across the UK business as it looks to automate more operations. At present, Santander employes 21,812 people in the UK and has said the layoff will happen before the end of 2024. However, the bank has not clarified how many customer-facing roles will be included in the cuts.
Santander is one of many banks that may have to pay compensation to customers who took out a loan to pay for their car.
Why are organizations cutting jobs?
Higher operational costs and the need to increase efficiency were cited by H&M, Direct Line and Santander, and economic pressures cannot be underestimated in the current market.
The UK government recently announced that National Insurance (NI) will rise by 1.2 percentage points from April 6, 2025, taking it from 13.8 percent per employee at present to 15 percent. NI is paid by both employers and employees and generated funds for benefits such as the state pension, as well as the National Health Service. By increasing employer contributions, the government aims to raise £25 billion a year.
Although many businesses have already said the NI rise will lead to price rises for consumers or lower wage increases for workers, it is not the only factor at play. Job cuts have been a fixture of business news over the course of 2024 as businesses look to enhance their overall financial position.
Klarna is increasing its use of AI to enhance its financial position ahead of a planned listing on the stock market. In August, the buy-now-pay-later giant said it is eliminating more than 2,000 roles by reducing workers who leave with AI and not hiring new workers.
As these stories demonstrate, service is not the only part of the customer experience that is seeing job cuts. Automated processes also threaten back-end operations-focused roles, and CX itself has faced a tough time in recent years as companies focus less on the competitive factors that make customer return, such as personal service and the availability of staff for both physical and remote interactions.
British department store John Lewis appears to be bucking this trend. It said in August that it will cut 153 roles, or one percent of its total workforce, to “improve customer service”. It is investing £5 million in digital headsets to enhance staff communication and “simplifying processes”. This includes no longer distinguishing between front and back-of-store employees as the retailer aims to “best meet customer demand” and improve interactions between department store employees and customers.
Quick links
- Will AI replace most customer service teams by 2034?
- 7 skills for CX teams: Mastering the balance of empathy, technology and data
- Overcoming today’s most common EX challenges