PhonePe cuts 60% of support staff as AI drives a 40-fold transaction surge

Artificial intelligence (AI) has played a pivotal role in enabling PhonePe to streamline operations that previously required human intervention

PhonePe, the fintech giant, has reduced its customer support staff by 60 per cent over the past five years, cutting its team from around 1,100 agents to just over 400, according to the company’s latest annual report filed on October 21. This move is part of the company’s strategic shift towards AI-powered solutions. During the same period, PhonePe recorded a staggering 40-fold increase in transactions, from FY19 to FY24.

“This efficiency was achieved by increasing automated customer service issue resolutions, powered by AI-driven chatbots, to over 90 per cent,” PhonePe stated in the report.

The company also highlighted its resilience in navigating external challenges, such as the Zero Merchant Discount Rate (MDR) law and the Covid-19 pandemic, which reshaped the business landscape. PhonePe attributed its ability to achieve profitability to a strong focus on process automation and unit economics.

Despite significant cost reductions, PhonePe said that customer satisfaction has only improved, evidenced by a consistent rise in its Net Promoter Score (NPS) over the past five years.

PhonePe further stated that its technological advancements have created over 22,000 jobs across India. The company currently employs more than 1,500 of India’s top engineers, who are developing cutting-edge solutions to support the country’s booming digital payments ecosystem.

Artificial intelligence (AI) has played a key role in enabling PhonePe to streamline operations that previously required human intervention. According to Nick Bunker, an economist at the Indeed Hiring Lab, AI is poised to impact jobs across sectors but is unlikely to trigger mass unemployment. “History shows us that other major technological advancements haven’t caused widespread job losses. While technology can eliminate certain roles, it also creates new ones,” Bunker was quoted as saying by AP.

Financially, PhonePe has experienced significant growth. In August, the company reported revenue of Rs 5,064 crore for the financial year ending March 2024, reflecting a 74 per cent increase from Rs 2,914 crore in the previous year. PhonePe also announced that it had reached profitability—excluding Employee Stock Ownership Plan (ESOP) costs—posting an adjusted net profit of Rs 197 crore for FY24, marking a significant turnaround from the Rs 738 crore loss recorded in FY23.