Southern Water has said it is looking to reduce up to 200 jobs.
The water company, which has around 4.6 million customers, has started a six-week consultation, following which a final decision will be made.
Southern Water added it has been two years “into a challenging business transformation programme”.
The supplier said in a statement: “We are making good progress and have delivered our best ever customer service score in the water industry league table. We’ve created more than 100 jobs in our IT department by bringing the service in-house.
“These positive improvements have been recognised by our regulators. However, there is more to do and the changes we are making will ensure our customer service remains fit for the future and meets our customers’ expectations, while keeping bills affordable and meeting the efficiency challenge set out by our regulator, Ofwat.”
Caroline Fife from Unison union said staff are “very upset”.
She added: “The company is under considerable financial pressure from Ofwat. Very unfortunately for a lot of staff as a consequence work will be transferred to Capita. All we can do is support staff as much as possible over the next few weeks.”