PhonePe Slashes Customer Support Workforce by 60%, Rides High on AI Chatbots

PhonePe has made a significant pivot towards automation, reducing its customer support workforce by 60% over the past five years. This reduction, from 1,100 agents to just over 400, coincides with a massive 40X surge in transactions, signaling the fintech giant’s reliance on artificial intelligence (AI) chatbots to maintain service efficiency. AI-driven chatbots now resolve over 90% of customer issues, ensuring that the company can handle increasing volumes while maintaining customer satisfaction.

AI chatbots, once confined to simple, rule-based tasks, have evolved into powerful tools using generative AI and natural language processing (NLP). These bots now manage complex customer queries seamlessly, providing personalised responses based on vast knowledge bases. This shift has allowed PhonePe to drastically cut costs and improve efficiency without sacrificing the quality of customer service. In fact, the company reported an improvement in its Net Promoter Score (NPS) during this period, demonstrating that AI can lead to not just operational savings but also a better customer experience.

The financial impact of this shift to AI is significant. PhonePe's revenue grew 73% year-on-year in FY24, reaching INR 5,064 Cr. This growth came alongside a notable turnaround in profitability, with a positive Adjusted Profit After Tax (PAT) of INR 197 Cr, compared to a substantial loss the previous year.

This move by PhonePe mirrors industry trends, where companies like Paytm and InMobi have also cut human customer service roles in favor of AI technologies. AI is increasingly seen as a critical tool in improving efficiency and lowering costs in customer service operations. Beyond handling customer queries, advanced AI systems provide businesses with data insights that help refine processes and further improve the customer experience.

Ultimately, PhonePe's transition to AI chatbots isn’t just a cost-cutting measure—it’s a strategic move to embrace the future of customer service. With AI poised to handle an increasing volume of tasks, companies like PhonePe are finding ways to scale operations while ensuring that customers get the best support, day or night. For businesses aiming to optimise their customer service, PhonePe’s AI strategy serves as a model for what’s possible in the era of automation.