The Dark Side of On-Line Customer Services – AmEx Lays Off 1500

Written January 20th, 2011 by
Categories: CEO's Blog
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The headline into today’s Raleigh, NC newspaper, the News and Observer (N&O) reads: “AmEx Will Cut 1,500 Jobs in Greensboro”.

Why?

According to the N&O article:

“As customers shift to electronic bill paying and online customer service, the volume of calls the center handles has dropped.”


I feel really bad about the impact that that is going to have on our neighbors in Greensboro, but noone should be terribly surprised by the announcement.  Back in December of 2008, I posted a blog entry entitled “Are You Hiring?”.  I pointed out that an “online customer service rep” was measured to perform about 3 times the routine work of a human CSR…and they were happy to work 24×7 without any vacation, smoking breaks or sick days.

The economics of the AmEx decision are compelling.

Thanks to the internet, and AmEx’s online customer service applications, they get to reduce their headcount by 80% and vacate a 403,000 square foot facility. That’s “real money”.

In what might be construed as a concession to the local area, but clearly has an ironic twist to it, AmEx is going to build a $400M datacenter nearby that will employ 100 people.  These 100 technical people will provide care and feeding to the computers that will soon provide the very same customer support that the 1500 people that they are replacing used to provide!

But it really is more than economics.  It’s about the expectations of the modern day consumer…that’s both in the B2C world as well as the B2B world.  They really don’t want to talk to customer service representatives unless they really have to (see my July 2010 blog post entitled “Why Your Customers Don’t Want to Talk to You“).

The march of technology trampling jobs is not a new story in our modern society.  To be sure it is an inevitable one, but it doesn’t always have to be a 100% negative one.

AmEx is being very gracious during this tough transition period and I believe we can all learn some great lessons from them.

According to the N&O article, AmEx is:

  • keeping 400 staff members…more than likely the most experienced folks
  • offering to relocate some people to other call centers…you don’t want to lose your best people if at all possible
  • providing a generous “package”…seniority based severance, counseling and outplacement services…a nice token gesture but of minor real value as these folks get thrown into the local 10%+ unemployed economy
  • offering a $10K tuition reimbursement
  • continuuing philanthropic contributions to the community for a few more years

Progress is progress.

These jobs aren’t going overseas to arbitrage lower wages, like our textile and furniture manufacturing jobs have done.  These jobs are being replaced by internet browsers who selflessly cater to the growing numbers of “we want to be in control of our time and demand full transparency of information” members of our society.

The moral of the story?  You can’t stop progress.  So you might as well figure out how to either lead it, or harness it, if you want to be a survivor.

Sam