- FinTech company Klarna plans to reduce its workforce by half, as its CEO Sebastian Siemiatkowski believes artificial intelligence (AI) can enhance its operational efficiency to reduce costs. This comes after its reducted its workforce from 5,000 to 3,800 employees last year.
- The Swedish buy-now-pay-later business reported a sharp decline in net losses and an increase in revenue this year, which its CEO attributed to the adoption of AI.
Klarna, a Swedish fintech business, made a strategic pivot to adopt artificial intelligence last year, aiming to enhance its operational efficiencies. The loss-making business is now planning to axe half its workforce, as AI is allowing them to ‘do much more with less,’ according to its CEO.
Sebastian Siemiatkowski, the CEO and co-founder of Klarna, announced plans to reduce the company’s workforce by half, citing increased productivity and revenue after adopting AI. He highlighted the benefits of AI during Klarna’s Q2 results on Tuesday, with the business narrowing its net loss from $84 million earlier to less than $1 million in 2024. Moreover, the earnings eport also showed a 27% increase in revenue and a 73% increase in revenue per employee.
The move comes after Klarna laid off 1200 employees last year, with plans to further reduce its workforce to roughly 2,000 employees in the coming years. CEO Sebastian Siemiatkowski also mentioned that its marketing division had been more productive, despite working with a team half its size compared to the previous year. Klarna has also implemented a hiring freeze, as it aims to rely on AI to maintain and improve its operations.
The CEO known for his support of AI highlighted Klarna’s future plans by saying, “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.”
In February 2024, Klarna claimed that its AI assistant could manage the workload equivalent of 70 human employees, outperforming human representatives in “errand resolution” accuracy and customer satisfaction levels.
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This announcement comes close to Klarna’s plans for an initial public offering (IPO), although Siemiatkowski told the Financial Times that the fintech business has not made any concrete IPO decisions yet.
Conclusion
Klarna’s strategic pivot towards AI-powered operations while reducing human staff underscores a wider trend in the technology industry. AI adoption is allowing businesses to replace traditional human roles with much more efficient and reliable AI systems. With Big Tech firms such as Google, Meta and Apple laying off 350,000 employees since the beginning of 2023, employees will certainly question business leaders about the balance between human effort and AI automation for sustainable growth.
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