Klarna has announced that it will reduce its workforce by almost 50 percent.
The buy-now-pay-later specialist believes that its investment in and use of AI will allow the company to cut thousands of jobs, reducing its staff from 3800 to 2000.
This follows a steady stream of releases from Klarna over the past two years, which have already seen the financial service firm lose over 1500 members of its workforce.
Speaking in December 2023, CEO Sebastian Siemiatkowski outlined that the company was freezing hiring as it looked to pursue AI alternatives.
This theme is also prevalent in the latest phase of planned job cuts, which was revealed during an interim financial results announcement where Siemiatkowski claimed that AI had directly contributed to a revenue boost of 27% in the first half of 2024.
In addition, the Klarna boss confirmed that average revenue per employee had risen by 73% year-over-year.
In a discussion with the Financial Times, Siemiatkowski explained how AI technology was enabling Klarna to be more efficient with a smaller workforce:
Not only can we do more with less, but we can do much more with less. Internally, we speak directionally about 2,000 [employees]. We don’t want to put a specific deadline on that.
Rather than introducing layoffs, Siemiatkowski confirmed that Klarna would continue with its strategy of “natural attrition.” As workers move on to higher-paying jobs or seek new opportunities, which is typical in the tech industry, the company will mostly opt not to replace them.
The CEO also stated that the company would not be employing common strategies like halting promotions, freezing pay raises, or increasing performance improvement plans, in order to encourage employees to leave.
This process would usually result in remaining employees facing a heavier workload. However, Siemiatkowski believes that AI will be able to pick up the slack, suggesting it could be a "positive development," potentially leading to higher pay for some employees.
According to Nicolas de Kouchkovsky, an Industry Analyst for CaCube Consulting, this further implementation of AI includes overhauling Klarna’s tech stack and ending its subscriptions to Salesforce and Workday.
In place of the partnerships, the company plans to introduce a streamlined system powered by generative AI GenAI, which could challenge traditional enterprise software models.
An AI Acolyte
Klarna and Siemiatkowski have been enthusiastic advocates of AI for quite some time.
Indeed, earlier this year, the financial service organization teamed up with OpenAI to introduce its first virtual assistant.
At the time, Klarna claimed that the new assistant was handling two-thirds of customer service chats and performing the work of 700 employees.
The company also stated that query resolution times had dropped from 11 minutes to 2 minutes, with customer satisfaction remaining stable.
