Artificial Intelligence: Klarna CEO Plans to Cut Workforce by 50% to Prioritize AI
Klarna, the Swedish buy-now-pay-later platform, is making a bold move towards automation and Artificial Intelligence (AI). CEO Sebastian Siemiatkowski recently revealed plans to reduce the company’s workforce from 3,800 to 2,000 employees, a significant 50% reduction. Siemiatkowski believes that by shifting customer service and marketing duties to AI, Klarna can achieve more with fewer employees, stating, “Not only can we do more with less, but we can do much more with less.”
Siemiatkowski’s vision for Klarna’s future is not surprising, given his previous emphasis on the cost-saving benefits of AI. In fact, Klarna implemented a hiring freeze last December with the intention of streamlining the company and replacing certain tasks with AI. Siemiatkowski faced criticism after boasting about the millions of dollars saved through automation in a now-deleted post on X. Tasks such as AI image generation and implementing an AI assistant allowed Klarna to achieve more with half the size of its marketing team.
Klarna’s focus on AI automation appears to be paying off in the short term. The company reported in its Q2 earnings call that it has significantly narrowed its net losses from $84 million to $980,000 when converted to US dollars. However, Klarna’s heavy reliance on AI comes with risks. A Goldman Sachs report suggests limited economic upside from AI, and history has shown that automation in certain services can lead to new problems rather than streamlined operations. Examples such as self-checkout kiosks and customer service automation have faced challenges and backlash in the past.
Interestingly, Klarna is not alone in its pursuit of AI investment over a larger workforce. Duolingo, the language learning platform, reduced its contractor workforce by 10% in January, citing the redundancy of workers due to AI. Additionally, both Meta and Google have also laid off employees as they deepen their investment in AI.
The move towards AI automation in Klarna and other tech companies raises questions about the future of work and the potential impact on jobs. While AI can bring efficiency and cost savings, it is vital to consider the potential consequences and ensure a balance between technology and human workers. As Klarna ventures into a future driven by AI, only time will tell if their gamble pays off or if they encounter unforeseen challenges along the way.
