Telstra chief executive David Thodey says call centre jobs across a range of sectors will not exist in five years thanks to the internet and smartphone applications.
Mr Thodey told ABC Radio's Jon Faine in Melbourne on Friday that he understood the "enormous costs" to local communities caused by taking away call centre jobs.
Telstra made 1600 positions redundant in the 12 months ending June 30, 2014.
"More and more you'll use an application on your phone and you'll use the web to interact with us so the future of call centre jobs is less in the future," he said. "In reality Jon [Faine] these jobs will not exist in five years.
"If you think about how you interact with the bank today you don't go into the bank branch that often. And that's going to be the truth about many of the traditional service related jobs – it's going to be more and more digitally done."
Mr Thodey also said Telstra had created a net addition of 400 extra Australian jobs in the past 12 months in different business areas.
"We need to be more innovative, we need to create businesses in software, in innovation, in all those areas and some of the other types of jobs we've had in the past just won't be there," he said.
CPSU national president Michael Tull said the feedback from Telstra workers about Mr Thodey's comments was not anger or sadness but "almost relief".
"It's really been overdue for David Thodey to finally reveal what the unions have been saying, which is that Telstra plans to phase out contact centre jobs in Australia in the not-too-distant future," he said.
"It's been apparent to our members for some time that technological change, investments with offshore partners and Telstra's global expansion plans all pointed to some big changes for the Australian workforce."
Mr Tull said the Union has spoken to Telstra about Mr Thodey's comments and would meet with representatives early next week to discuss how call centre staff can be retrained for new jobs.
Telstra has also sent a large number of local jobs overseas with 671 positions sent into Asia in July.
But Mr Thodey said these positions were important to serve the company's new customers in the Asian region.
"We've got to become an Australian company doing business in Asia," he said. "Many of our customers over the next five to ten years will be Asian-based not just Australian.
"The offshoring is a temporary step in some sense for us as well."
Vodafone Australia chief executive Inaki Berroeta criticised Telstra for off-shoring workers earlier this month. It is in the process of expanding its Tasmanian call centre.
"We have increased the size of our Tasmanian call centres [and] to have a contact centre here costs about four times what it would cost in India so it's a big commitment to service," he said. "You see companies in this market that are extremely profitable and even getting profits from the government that are destroying jobs and going outside for the sake of cost.
"[Telstra's cuts were] very surprising. I think that many companies are making a lot of money and putting profits against customer satisfaction."
The full exchange:
Jon Faine: But you're so awash with cash you're giving it back to shareholders in a share buyback so if you wanted to keep more jobs here and squeeze the profit margins to be less you could, couldn't you?
David Thodey: Well yes we could but it wouldn't really achieve our long-term objective of building this capability offshore. Also in reality Jon these jobs will not exist in five years. If you think about how you interact with the bank today you don't go into the bank branch that often. And that's going to be the truth about many of the traditional service related jobs – it's going to be more and more digitally done.