COVID-19 will destroy jobs, and many won't return

The pandemic will spur layoffs within the telecom sector, driving companies to automate activities where employees pose a risk.

Iain Morris, International Editor

April 1, 2020

6 Min Read
COVID-19 will destroy jobs, and many won't return

Employees have long presented many drawbacks to the studious investor. They insist on vacations, demand other expensive benefits, need paying for their labor and occasionally become ill. The COVID-19 outbreak is an unprecedented illustration of just how disruptive that can be.

Looking for positives during the pandemic, some vainly hope it will prompt a shift in thinking about society and the value economies ascribe to ordinary people. The idea is that your Machiavellian CEO, toughing out a lockdown on his country estate, will develop a sudden appreciation for minimum-wage supermarket cashiers and low-paid nurses risking their lives so that he can eat and be cared for.

Yet most company bosses will be thinking of ways to minimize business disruption until the virus abates. And when employees are the risk factor, the obvious solution is to reduce the company's need for certain staff. In supermarkets, that means replacing more cashiers with self-service checkouts. For takeaway restaurants, it means using an online service that delivers to the doorstep instead of allowing customers onto the premises.

While telecom has many equivalents, its employees who work in offices are not among them, and not just because these individuals include the management team. If nothing else, COVID-19 has shown that many people do not have to clog up transport networks, killing hours of the day in transit to expensively maintained buildings: They can more easily and just as effectively do their jobs at home, thanks to the wonders of residential broadband – a fact that must have been obvious to the industry behind the technology.

But like the supermarket cashier and nurse, telecom staff employed in call centers, shops and network operations centers (NOCs) cannot so easily be dispatched home to work in their bedrooms or kitchens. Moreover, bosses are under some political pressure to remove these employees from the workplace. On March 26, Louise Haigh, the UK Member of Parliament for Sheffield Heeley, sent a tweet that would have made uncomfortable reading for one of the country's biggest mobile operators. "At O2 call centers, hundreds of staff are still coming into work," she wrote. "It is simply not credible that home working cannot be arranged for a … telecommunications firm."

O2 did not respond when Light Reading requested a status update on its call centers, but home working is probably not the ultimate answer. Long before the virus struck, telecom operators had been among numerous customer-facing organizations making investments in "chatbots" – clever software systems that can deal with the queries usually handled by a customer service assistant. Most rely on instant messaging, and create the illusion a customer is corresponding with a human being, but voice-activated chatbots are also in use.

So far, the impact on the telecom workforce has been less dramatic than some feared. No doubt, chatbots still lack the sophistication needed to entirely replace humans, and they may never acquire it. Until the dawn of COVID-19, operators were under no immediate pressure to empty their call centers of staff. For the efficiency-conscious, cutbacks in other areas may have looked easier.

Strange days
As the virus spreads, circumstances have quickly changed. What seemed like a useful complement to the customer service assistant is now a potential substitute. That chatbots would replace some jobs has long been apparent. Why else would Vodafone have offered customer service assistants the opportunity to retrain as coders at the same time it was introducing TOBi, a chatbot powered by IBM's Watson-branded artificial intelligence? COVID-19, though, puts more jobs at risk.

Unlike some call centers, shops selling non-essential goods, including electronic equipment, were quickly shuttered in countries under lockdown. Thankfully, for service providers, customers were already turning to online stores to buy their gadgets and accessories. A lengthening in handset replacement cycles and a gradual shift to eSIMs – allowing customers to change service providers without swapping equipment – will make physical stores even less important.

In a sign of what the future could hold even after the COVID-19 pandemic, Dixons Carphone, one of the UK's largest smartphone retailers, announced its closure of all 531 standalone stores on March 17, days before the government imposed a lockdown. The move, it said, would cost 2,900 jobs. "Customers are changing how they buy technology, and Dixons Carphone must change with them," said Alex Baldock, the firm's CEO, in a statement. Gadget shoppers are increasingly heading to its "large and growing online business," he said.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

NOCs may be another source of concern to the company boss and, indeed, the politician. These facilities, used to monitor networks and ensure problems are fixed, have traditionally featured hundreds of employees sat in dimly lit rooms, slurping coffee as they stare at walls of flickering screens. They are ideal breeding grounds for an airborne virus that could devastate critical operations.

By taking advantage of automation, however, operators have already dispensed with the need for some NOC employees. Vodafone used to need about 1,500 people to manage its NOCs, according to Scott Petty, the chief technology officer of Vodafone UK. These days, employee numbers are in the "low-single-digit hundreds," he revealed during a press briefing at the end of 2019. "Five to seven years from now, there will be a very small number of people that run the NOC infrastructure," said Petty. "The way we run networks is fundamentally changing."

Vodafone has largely blamed these particular cuts for the reduction in the size of its UK workforce over the last couple of years. While figures for the March-ending last fiscal year are not yet available, the UK business shed about 1,700 jobs in the previous two, about 13% of total headcount. It is not unique. In March 2018, Finland's Elisa claimed to have fully automated its NOC. A few employees can be called (by machines) if something goes wrong, but the facility is what the industry likes to call "zero touch."

In the pre-COVID-19 era, operators in Europe and North America were slashing jobs to protect or boost margins as business came under pressure. In the US, AT&T and Verizon axed nearly 30,000 jobs last year, more than 7% of the total, and still grew sales. Seven incumbents in western Europe cut nearly 18,500 roles, about 3% of the workforce, and all bar one saw an increase in revenues per employee. COVID-19 is an accelerant for these initiatives, and one that will bring the tacit approval of authorities currently more worried about safety than employment. Just don't expect jobs to come back when the virus is gone.

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— Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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