The online electrical goods seller AO World has revealed it is outsourcing up to 200 UK call centre roles to South Africa blaming rising labour costs, as it handed £20m to shareholders.

As the retailer reported a jump in profits, it said it was shifting the majority of call centre jobs overseas “in response to ongoing inflationary cost pressures, and particularly rising employment costs”. It expects to save about £4m a year as a result of the change.

AO said on Wednesday that pre-tax profits had jumped 145% to £50.5m in the year to 31 March, and it was handing £20m in special payments to shareholders.

About 150 roles in phone sales and enquiries have already been switched from AO’s call centre in Bolton to South Africa over the last 12 to 18 months. A further 50 are expected to go, with roles switching as people in the UK choose to leave rather than through redundancies.

More than 100 further roles, handling more complex customer queries, will remain in the UK. AO said its overall employee numbers fell by 340 to 2,800 in the year as it made efficiencies across the business.

The company, founded by the entrepreneur John Roberts after a £1 bet in a Bolton pub in 2000, grew rapidly by selling household appliances online. However, it suffered after problems with international expansion and a post-pandemic slump in trade. Last year, it bought the resale specialist MusicMagpie and it recently launched a dedicated mobile phone selling site.

Roberts, chief executive of AO, said the group now had “the strongest balance sheet in our history. And all delivered against a backdrop of rising costs”.

AO said sales rose 11.4% to nearly £1.3bn in the year and had continued well with a 17% surge in TV sales in May as households prepared to watch the men’s football World Cup for which both England and Scotland have qualified.

In its annual financial update published on Wednesday, AO also said it had carried out “a small-scale, exploratory trial during the year to test the use of robotics within our warehousing operations”. It said early results “are encouraging” and it was now beginning to do further tests in its live operations.

AO said it was examining the use of more automation amid “inflationary pressures arising from changes to national insurance and the national minimum wage in April 2025 had a material impact on operating costs of about £8.5m across the group year on year”.

The discloses by AO come amid rising concern about youth employment as technology including robotics and AI replaces some entry-level jobs.

Overall unemployment in Britain at its highest level since the outbreak of the Covid pandemic, with young people bearing the brunt as businesses warn about the impact of tax increases and an economic downturn from the Iran war.