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Telcos are cutting jobs but not because of AI (2025)

Why Telcos Are Cutting Jobs — And It's Not Just About AI 2025

Headlines and social media chatter increasingly paint a familiar picture: artificial intelligence is sweeping through the telecom sector, leaving job losses in its wake. Stories like Light Reading’s “AI is not the main cause of telco job cuts” challenge that narrative, but the idea persists in the public eye.

Yes, AI is reshaping workflows, streamlining operations, and automating repetitive tasks — but that’s only part of the story. Job reductions across major telecom operators stem from deeper, often structural changes. Think shifting revenue models, industry consolidation, and large-scale digital transformation strategies — not just smarter algorithms.

To understand what's actually driving workforce reductions at companies like BT, Ericsson, and Vodafone, it's time to go beyond surface-level attributions. AI has a role, but it’s not the lead actor in this script. Let’s break down the real forces at play.

What the Numbers Reveal: Telco Job Cuts Around the Globe

UK Telecoms Lead with High-Profile Reductions

In the United Kingdom, two telecom giants—BT and Vodafone—have already committed to deep job cuts. BT Group announced in May 2023 that it would reduce its workforce by up to 55,000 jobs by the end of the decade, representing nearly 42% of its total headcount. CEO Philip Jansen stated the company intends to become a "leaner business" and expects a significant portion of those reductions to occur once its fibre rollout and customer digitisation efforts mature.

Vodafone followed with a similarly stark outlook. In June 2023, the company confirmed plans to cut 11,000 jobs over three years, amounting to more than 10% of its global workforce. The bulk of reductions are set to unfold across European markets, including its UK headquarters, as part of a broader restructuring aimed at sharpening the company’s financial performance.

Wider Trends Across Europe and North America

This shift isn't confined to British telecoms. Across Europe, layoffs signal a regional adjustment to intensified margin pressure and stalled growth. For instance, Telekom Austria revealed a plan in early 2024 to streamline operations and reduce staffing through attrition and targeted redundancies. In Germany, Deutsche Telekom confirmed in its Q1 2024 report that workforce rationalisation would remain an “ongoing lever” for cost control, especially in back-office and administration roles.

Transatlantic parallels are also developing. In North America, major players like AT&T and Verizon haven’t formally declared sweeping job cuts on the scale of their European counterparts, but financial disclosures hint at a quieter recalibration. AT&T’s 2023 annual report noted restructuring expenses involving "employee separation plans," while Verizon's Q4 2023 earnings call cited investments in operational automation and a "review of organisational layers" as part of its strategy to boost EBITDA margins.

Announcement Figures vs. Actual Reductions: Following the Timeline

These figures represent not just planned reductions but active workforce transformation strategies. Regular updates in earnings calls and quarterly filings offer clear visibility into how timelines are unfolding vs initial headlines. In many cases, a phased approach allows these firms to manage labour shifts while maintaining key technical competencies.

Signals from Quarterly Earnings and Boardrooms

Analyst calls held by BT, Vodafone, and other leading operators in late 2023 and early 2024 consistently flagged cost discipline and simplification as board-level priorities. BT’s H1 2024 earnings pointed to cost savings of £3 billion as non-negotiable by 2025. Vodafone’s new CEO, Margherita Della Valle, used her first address to investors in May 2023 to say, “Our performance has not been good enough”—a clear message accompanying the announcement of workforce cuts.

These moves are not reactive jolts but deliberate elements of long-term turnaround efforts. When pressed by analysts, executives underscored headcount changes as a result of business refocus—not short-term automation gains or experimental AI usage.

Blaming AI Misses the Bigger Picture

AI Impacts Jobs — But Mostly Indirectly, for Now

The conversation around artificial intelligence often leaps from innovation to job loss, skipping crucial context. In telecommunications, AI currently plays a minor operational role. Where it exists, it's working quietly: streamlining ticketing systems, providing chat support, or suggesting network optimizations. These functions augment existing jobs more than eliminate them. When positions are eliminated, AI is rarely — if ever — the primary tool that replaces human labor directly.

Review the Press Releases — AI Isn't Cited

Scan through recent telco layoff announcements from major players like BT Group, Vodafone, or Telia. None cite AI automation as the core reason for large-scale job reductions. Instead, companies refer to “cost transformation,” “streamlining operations,” and “restructuring.” These are decisions rooted in financial strategy and market competition. If AI makes an appearance, it's buried deep in broader transformation language, not front and center as a job-cutting catalyst.

Widespread AI Integration in Telco Ops Hasn't Happened Yet

Advanced AI hasn’t yet taken over core telecom functions. Telcos are experimenting with generative AI in customer service, but pilot projects dominate, not real-time deployments at scale. Core network engineering, maintenance, and service provisioning still rely heavily on human expertise. Even AI-driven network automation systems, like those supporting predictive maintenance or traffic routing, require specialized human oversight. The infrastructure may be evolving, but the human layer remains structurally embedded.

So, while AI may loom as a future variable in the workforce equation, blaming it for today's layoffs disconnects the dots. The data and direct statements from the companies themselves don’t support that narrative.

What’s Really Driving Job Cuts in Telcos? Look Past the AI Headlines

Cost-Cutting Measures in Telcos

Leadership teams are turning up the pressure on operational spending. With average revenue per user (ARPU) plateauing or declining in key markets, many telcos—especially in mature economies—are pursuing aggressive cost rationalization strategies. For example, Vodafone set a three-year plan to cut €1 billion in costs, of which workforce reductions form a major component. BT Group’s 2023 announcement to reduce up to 55,000 jobs by 2030 fits into a larger attempt to achieve major opex savings tied to digital transformation and infrastructure streamlining.

Legacy Service Revenue Decline

Customer behavior has changed dramatically. Landline voice, once a cornerstone of telco revenue, has eroded. According to Ofcom data, UK residential landline call minutes fell by over 50% between 2016 and 2021. SMS services show similar trends, suppressed by the rise of internet-based messaging platforms like WhatsApp and iMessage. These declining legacy streams no longer justify the massive support infrastructure behind them—nor the headcount.

Maintaining outdated systems is expensive and increasingly impractical. Positions tied to legacy switch maintenance, copper network monitoring, and billing for traditional products have become redundant as operators refocus on newer services.

Network Modernization

The shift to IP-based and cloud-native networks has introduced wide-scale efficiencies, rendering some traditional telecom roles obsolete. As of 2023, over 250 operators in 95 countries have launched commercial 5G services globally. Operators such as Deutsche Telekom and Telefónica report that next-gen network rollouts have accelerated decommissioning of older systems. With fewer moving parts and centralized software-defined networks, automation replaces tasks that once required staffed operations centers and field teams.

Roles previously needed for physical infrastructure are either being consolidated or eliminated. Network engineering, for instance, is evolving—less cabling, more cloud coding. This quiet restructuring happens in parallel with customer-facing announcements around 5G achievements and digital readiness.

Capital Expenditure Management

Telcos are in a reinvestment phase. Building out 5G, expanding fiber, and acquiring spectrum requires billions in capital. In 2023 alone, global telecom capex reached $328 billion (IDC), creating financial pressure to trim fixed costs elsewhere. This includes re-evaluating labor-intensive departments that no longer align with lean operating models.

Achieving returns on these heavy investments demands productivity per employee. CFOs are actively reallocating capital away from legacy workforce overhead toward network and digital growth initiatives.

Automation and Digital Transformation

Automation in telcos doesn’t start with AI—it begins with systems optimization. Self-service platforms have become ubiquitous, reducing call center volumes. Network operations centers (NOCs) increasingly rely on predictive maintenance technologies. A 2022 survey by Analysys Mason found that 67% of operators in North America implemented workflow automation in at least one major function.

These process upgrades translate into fewer manual tickets, fewer repetitive backend tasks, and eventually fewer roles. What’s driving the change isn’t artificial intelligence. It’s methodical process digitization and cloud tooling adopted to compete on efficiency, not on headcount volume.

What gets framed in headlines as “AI replacing jobs” frequently turns out to be structured transformation initiatives years in the making. The human impact is real, but the driver isn't a surge in generative AI adoption—it’s sustained enterprise restructuring aligning with new technology stacks.

The Strategic Pivot: Operational Efficiency & Reorganization

Driving New Efficiencies Through Structural Change

Telecommunications companies are not downsizing to chase trends—they’re reallocating resources to improve performance. Behind the job cuts, there’s a deliberate pivot toward leaner operations and future-proof architectures. Cost-optimization is one driver, but scalability, speed, and agility also form the foundation of this transformation.

Operational Efficiency Programs Gain Traction

Major telcos are rolling out multi-year efficiency strategies that touch every layer of the enterprise. These programs target overlapping roles, fragmented systems, and siloed departments. Deutsche Telekom's "Lead in Business" initiative and AT&T's continuous simplification efforts highlight this focus. By streamlining processes, automating redundant tasks, and eliminating duplicated roles, these companies are reshaping their internal ecosystems for speed and simplicity.

Consolidating Back Office and Support Functions

Support functions such as HR, finance, procurement, and IT services have become central to consolidation efforts. Shared service centers are replacing regionally managed teams. Vodafone, for instance, has created pan-European hubs to coordinate administrative functions. These shared models improve consistency, reduce overhead, and fast-track decision-making.

BSS/OSS Modernization Reduces Complexity

Modernizing Business Support Systems (BSS) and Operational Support Systems (OSS) has a direct impact on workforce structure. Legacy platforms demanded extensive manual intervention. Today, converged billing, real-time analytics, and cloud-native OSS reduce the manpower needed to manage service delivery and customer lifecycle management. In 2023, Orange transitioned parts of its OSS stack to a cloud-native ecosystem, cutting operational costs while accelerating incident response times.

Strategic Restructuring: Realigning Internally

Reorganization goes beyond cost—it answers to changing customer demands and digital ambitions. Telcos are shifting from region-based units to function-based models, merging siloed business units to eliminate overlap. Swisscom, for instance, merged its B2B and B2C mobile divisions under a single product management team, simplifying customer journeys and accelerating go-to-market initiatives.

Mergers, Acquisitions, and Internal Realignments

Workforce changes often follow strategic deals. When BT Group consolidated its enterprise divisions in 2023 following the spin-off of BT Global, several administrative and managerial layers were removed. As acquisitions integrate, telcos unify platforms, reshape org charts, and centralize decision-making authority in fewer roles.

Outsourcing and Offshoring Reshape Job Geography

More roles are relocating than vanishing. Functions viewed as non-core—such as network engineering, call center operations, and IT support—are increasingly being handled by third parties or nearshore centers. Verizon and Telefónica continue to expand their relationships with global vendors in Latin America and Southeast Asia. This shift places roles in markets with lower costs, without compromising output quality.

Outsourcing Network and Customer Support Operations

Network management, field services, and customer care are frequently outsourced to specialized service providers. In 2022, Telenor outsourced large portions of its network operations to Ericsson and Nokia under managed services contracts. Similarly, many telcos rely on partners like Amdocs or Tech Mahindra to operate support desks and manage digital channels, allowing internal teams to concentrate on innovation and customer experience design.

Market Pressures and Competitive Forces Reshaping the Telco Landscape

Rising Competition From Digital-Native Players

Established telcos now share the battleground with agile entrants who approach the market with radically different cost structures and service models. Mobile Virtual Network Operators (MVNOs), which lease infrastructure from incumbents instead of building their own, continue to undercut traditional pricing schemes. According to GSMA Intelligence, as of 2023, there are over 1,300 MVNOs operating globally, targeting niche demographics and exerting downward pressure on pricing margins.

In parallel, Over-the-Top (OTT) service providers like WhatsApp, Signal, and Zoom have steadily eroded core voice and messaging revenues. WhatsApp alone enabled over 100 billion messages per day by late 2022, bypassing telcos’ SMS services entirely. Customers increasingly expect communication as a bundled, zero-cost feature rather than a core paid service.

Pricing Wars and Shrinking Margins

In highly saturated markets, telcos compete not by offering new value but by slashing prices. For example, in India—which became the world’s second-largest telecom market in subscriber base—Reliance Jio's aggressive pricing led average revenue per user (ARPU) to plummet industry-wide. From over ₹200 in 2016, ARPU dropped below ₹100 for many operators by 2019 after Jio’s entrance, prompting devastating impacts across the sector.

European operators face similar pressure. A 2023 European Telecommunications Network Operators’ Association (ETNO) report highlighted that the sector’s return on capital employed (ROCE) was just 6%, significantly below the cost of capital. In this environment, cost efficiency becomes non-negotiable for survival—often manifesting in restructuring and job consolidation.

Consolidation Aimed at Scale, Not Innovation

Cutthroat competition isn't just prompting layoffs—it’s driving M&A deals. Fewer players seek to control larger portions of market share. When three telecom mergers closed in Europe during 2022 and 2023, each resulted in significant workforce reductions due to overlapping functions. The merger of O2 and Virgin Media in the UK, for example, immediately flagged up to 2,000 redundancies, largely in back-office and support roles.

Post-merger integration relies heavily on extracting synergies. This often targets duplicated departments like HR, finance, and network engineering. The goal? Not faster innovation, but improved EBITDA performance through alignment and elimination of redundancy. In the U.S., T-Mobile’s acquisition of Sprint in 2020 produced over $6 billion of annual run-rate synergies by 2022—tied directly to workforce and infrastructure rationalization.

Competing in the Age of Zero-Differentiation

In consumer-facing services, telcos struggle to build loyalty. Most customers don’t see much difference between providers besides price. This commoditization increases churn risk and undermines long-term revenue forecasting. To respond, providers turn inward—streamlining operations, simplifying org charts, and offloading resources that don't tie directly to customer retention or network performance.

From every angle—pricing, product differentiation, and revenue structure—the telco sector operates under enormous pressure. Workforce reductions are just one consequence in a broader push against eroding margins and encroaching competition. So when telecom firms cut jobs, it's not automation forcing their hand. It's survival in a high-stakes, low-margin market.

Workforce Adaptation vs Elimination

Reskilling, Not Replacing: Investments in Employee Capability

Telecom companies aren’t just trimming jobs—they’re transforming roles. Rather than using automation as a direct replacement for human workers, major telcos are channeling resources into workforce adaptation. This shift is visible across multiple initiatives focused on reskilling and upskilling existing employees to align with next-gen network strategies.

The rollouts of 5G and network virtualization demand a new mix of competencies. Technicians who previously worked on copper-line maintenance now train for cloud-based infrastructure deployment. Field engineers are learning to manage software-defined networks (SDNs), and operations staff are transitioning into roles that emphasize data analytics and digital service delivery.

Sales engineers and support staff are also being reoriented. A renewed focus on B2B services, coupled with the complexity of enterprise digital solutions, has created demand for hybrid roles blending technical acumen with client-facing skills. Companies are integrating training in agile methodologies, digital workflows, and customer analytics into internal learning pathways.

Union Pushback and Public Scrutiny

Workforce adaptation hasn’t replaced job cuts entirely, and labor groups are not staying quiet. Unions in the UK, France, and Germany have raised concerns over the pace and scale of job eliminations—especially when companies post record profits.

In Parliament hearings and across media outlets, public figures have joined calls for more responsibility from industry leaders. Lawmakers in the UK, citing both economic equity and long-term national telecom resilience, pressed for incentives or mandates encouraging firms to retrain rather than release experienced staff.

The dynamic unfolding isn’t a clear-cut race against the machine. It’s a negotiated transition, where automation and upskilling compete in tandem, shaped by corporate strategy, labor pressure, and public accountability.

The Role of AI: A Longer-Term Factor, Not the Immediate Cause

Where AI Is Being Piloted in Telecom Operations

Across global telecom companies, artificial intelligence is being integrated into operations through careful pilot programs rather than sweeping overhauls. These initiatives focus on augmenting existing workflows rather than replacing entire job functions.

What AI Is Changing Now: Productivity, Not Employment Figures

AI's current footprint in telecoms is narrowly focused. It improves speed, accuracy, and scalability in tasks that were already standardized or ripe for automation. This includes processing customer feedback, sorting service tickets, and identifying network usage trends. What it hasn’t done—at least not yet—is trigger mass layoffs linked explicitly to AI adoption.

Consider the deployment of robotic process automation in billing: AI tools extract and interpret data faster than manual entry teams, yet these tools still require regular supervision, updates, and human oversight to ensure accuracy and compliance. Similarly, network operators still rely on engineers to validate insights produced by machine learning algorithms.

What’s Actually Being Replaced?

Currently, AI is absorbing repetitive, rules-based, low-value tasks. Data entry, log categorization, first-level technical triage—these tasks are labor-intensive but don’t call for problem-solving or domain-specific knowledge. Technical experts, engineers, systems architects, and solution designers remain irreplaceable in managing complex network upgrades or designing new service offerings.

No AI model in deployment today can replicate the nuanced judgment of a systems analyst navigating a multi-vendor infrastructure migration. Nor can it draft regulatory compliance reports that require legal context and cross-departmental collaboration.

What Lies Ahead: Gradual Disruption, Not Abrupt Displacement

Over the next five to ten years, AI's scope in telecom will grow. Automation will penetrate deeper into areas like fraud detection, personalized marketing, and dynamic network scaling. However, these shifts will demand reskilling, not sudden workforce reduction. Human roles will evolve—moving from execution to supervision, from repetition to interpretation.

Instead of eliminating jobs wholesale, AI in telecoms introduces new ones: prompt engineers, AI operations managers, data governance specialists. It's a redistribution of labor, not an obliteration. Telecoms that invest in training paths alongside AI deployment will realign their workforce faster and extract more value from the technology itself.

Dissecting the Divide: Media Narratives vs Company Statements

What the Telecom Giants Actually Said

When BT Group announced plans to reduce its workforce by up to 55,000 jobs by 2030, media coverage immediately leaned on automation and AI as the primary culprits. Yet, BT's executive statements pointed elsewhere. CEO Philip Jansen emphasized a shift toward a “leaner business,” driven by the completion of the group’s fiber rollout and the ongoing shift toward an all-digital network. “By the end of the 2020s,” he stated, “we will rely on a much smaller workforce and a significantly reduced cost base.”

Vodafone’s official line followed a similar pattern. In 2023, the company announced 11,000 job cuts over three years. These cuts coincided with massive restructuring under newly appointed CEO Margherita Della Valle, who pointed to underperformance in key markets and a lack of commercial focus. Her comments in the company’s full-year report framed the cuts as part of a turnaround strategy—not a response to AI adoption.

Are the Headlines Getting It Wrong?

Headlines from major tech and business outlets painted a different picture. Light Reading published a piece in May 2023 titled, "AI Is Reshaping Telecom Jobs Faster Than Expected," pushing the theory that automation lay at the heart of widespread staff reductions. The Financial Times, though more measured, also drew a straight line between emerging technology and job losses, asserting in one analysis that telcos are "leaning into AI efficiencies at the cost of human roles."

Reuters maintained a more balanced approach. Coverage of BT’s announcement, for instance, did not foreground AI but rather featured Jansen’s direct comments about the natural consequences of network modernization and digitization programs. Their reporting acknowledged automation but contextualized it within a broader framework of infrastructure simplification and business streamlining.

The Discrepancy in Focus

Why does the narrative diverge? Job cuts linked to artificial intelligence generate attention—and traffic. Terms like "automation" and "AI layoffs" inject a sense of dramatic urgency that boosts engagement, even when company reports tell a more nuanced story. The disconnect rests not in deliberate misinformation, but in a preference for simplification over complexity. When weighed against actual earnings calls and strategic roadmaps, the AI angle rarely stands alone.

Job Cuts in Telecom: What the Headlines Didn’t Tell You

The noise around artificial intelligence often overshadows quieter, more immediate economic forces shaping the telecom industry. Beneath the hype, the rationale behind recent job cuts reads less like a science fiction plotline and more like a standard playbook for restructuring in mature sectors.

Multiple telcos, from Vodafone to BT Group, are making workforce adjustments driven by cost reduction mandates, market saturation, and a shift in macroeconomic conditions. Operating models are evolving as these companies face flat revenue trajectories, mounting capital expenditure demands for 5G rollout, and increased shareholder pressure to deliver leaner margins.

AI enters the frame, but not as a mass terminator of jobs. The use of automation tools and algorithms supports operational refinement—enhancing network management or customer support functions—but is not acting as the main trigger for these layoffs. Even executive leadership at major telecoms stops short of crediting AI as the justification for headcount reductions; it’s one factor among many, not the headline act.

So, what deserves more attention than exaggerated AI narratives?

The layoffs happening now aren't about machines replacing humans overnight. They're responses to inefficiencies, pressures, and evolving priorities—pressures magnified in a hyper-competitive telecom landscape. Look past the AI clickbait and follow the capital, the infrastructure logs, and the balance sheets. That’s where the real story unfolds.