Klarna axes thousands of jobs as AI replaces employees
Buy now pay later fintech Klarna has announced that it is planning on axing almost half of its employees in the coming years, attributing these cuts to efficiencies gained through its investment in AI.
Klarna has already cut its workforce from 5000 to 3800 in the last year, and apparently wants to continue reducing that number to around 2000. It aims to do this by using AI in its marketing and customer service departments.
In its interim report released on the 27th August, the company said that AI has been taking on more and more tasks at the firm, meaning that Klarna can reduce the number of human workers.
Klarna said: “Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits.”
Klarna reported a 73% increase in average revenue per employee compared to the same period last year. A significant boost in efficiency has been attributed to the integration of AI, particularly within customer service. The company estimated that AI now handles the workload equivalent of around 700 employees.
Klarna also noted that the average time to resolve customer issues has dropped from 11 minutes to just two, without any decline in customer satisfaction scores.
The company said: "Our AI assistant now also serves as a powerful shopping assistant that helps consumers discover and choose products tailored to them, further transforming the shopping experience and helping them save time and money."
Siemiatkowski has said that Klarna plan to reduce its workforce through "natural attrition," meaning the company will not replace employees who leave, and effectively implementing a hiring freeze. AI will then take over the additional responsibility over the increased workload that is created through the slashing of jobs.
The interim report results have revealed that Klarna has boosted its revenue by 27%, reaching 13.3 billion Swedish krona (£990 million). The company also made a notable turnaround, shifting from last year's loss of 456 million krona to an adjusted profit of 673 million krona.
This performance came as Klarna continued its efforts to reverse its fortunes after facing financial difficulties in 2020, following an aggressive expansion in the US. The company's valuation took a steep dive between 2021 and 2022, dropping from 46 billion US dollars (£34.8 billion) to just 6.7 billion dollars.
Siemiatkowski has indicated that Klarna might pursue a stock market listing as early as next year.
