Klarna, the Swedish buy-now-pay-later platform, is making a bold move by planning to cut its workforce by 50% in the next few years. The CEO, Sebastian Siemiatkowski, is so confident in the power of AI that he aims to reduce the employee count from 3,800 to 2,000. This decision comes after Klarna already conducted mass layoffs last year, reducing their workforce from 5,000. Siemiatkowski intends to leverage AI to take over customer service and marketing duties, stating that they can accomplish much more with fewer employees.
Siemiatkowski’s enthusiasm for AI is not unfounded. Klarna implemented a hiring freeze last December with the goal of “shrinking” the company and replacing certain tasks with AI. In a now-deleted post, Siemiatkowski faced backlash for boasting about the millions of dollars saved through automating tasks like AI image generation and implementing an AI assistant. Klarna’s approach seems to be paying off in the short term, as their Q2 earnings call revealed a significant reduction in net losses from $84 million to $980,000.
However, betting big on AI automation is not without risks. Economic experts from Goldman Sachs believe that there may be limited economic benefits from AI in the US. History has shown that automation of certain services, such as self-checkout kiosks and customer service, can create new problems instead of solving them.
Klarna is not alone in its decision to cut its workforce in favor of investing in AI. Other tech companies, such as Duolingo, Meta, and Google, have also laid off employees as they deepen their investments in AI.
While Klarna’s move to rely more on AI may lead to short-term cost savings and increased efficiency, it remains to be seen whether this gamble will pay off in the long run. The integration of AI into various industries has its challenges, and companies must carefully consider the potential drawbacks and unintended consequences of relying too heavily on automation. As AI continues to evolve, finding the right balance between human expertise and AI capabilities will be crucial for companies to thrive in the ever-changing technological landscape.
