Klarna Plans To Cut Workforce By Nearly Half With AI

'Not only can we do more with less, but we can do much more with less,' CEO says

Klarna, the prominent "buy now, pay later" fintech company, plans to significantly reduce its workforce as it continues to invest in artificial intelligence technology.

The firm, which is based in Sweden and has already shed over 1,000 jobs in the past year, aims to brings its employee count to as few as 2,000 in the coming years to streamline operations and prepare for a potential stock market listing.

In an interview with the Financial Times, CEO Sebastian Siemiatkowski revealed that AI has played a crucial role in driving efficiency and reducing costs, enabling Klarna to achieve substantial savings by replacing human workers with AI-powered solutions.

"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," he added.

Klarna has been at the forefront of AI adoption, leveraging the technology to automate tasks such as customer service and marketing.

Its AI-powered chatbot has reportedly replaced the work of 700 human employees, reducing average resolution times for customer service issues from 11 minutes to just two while maintaining high customer satisfaction levels, according to Klarna.

In May, Klarna reported that nearly 90 percent of its employees use GenAI in their daily tasks. This widespread adoption extends to all teams, with non-technical departments like Communications, Marketing and Legal showing usage rates of 93 percent, 88 percent and 86 percent, respectively.

"We push everyone to test, test, test and explore," Siemiatkowski said at that time.

"As Klarna continues to discover applications for OpenAI's tech, there's the potential to take the business to new heights. We're aimed at achieving a new level of employee empowerment, enhancing both our team's performance and the customer experience."

The company's average revenue per employee has increased by 73 percent in the past year, which it argues demonstrates the effectiveness of its AI-driven strategy.

Despite the significant workforce reductions, Klarna has avoided layoffs, relying instead on natural attrition and a hiring freeze.

Siemiatkowski has been vocal about the positive impact of AI on efficiency and productivity, even if it means job losses.

Bankers and investors are closely watching Klarna's progress as the company prepares for a long-awaited initial public offering (IPO).

Once valued at $46 billion, Klarna has seen its valuation plummet in recent years due to rising interest rates and market volatility.

However, AI-driven efficiency gains and a renewed focus on profitability could boost its appeal to investors. A recent valuation estimate suggests that the fintech firm could achieve a valuation of between $15 billion and $20 billion at an IPO.

On Tuesday, Klarna announced its first-half financial results, revealing a significant turnaround from losses in the previous year.

It reported an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the first six months of 2024, a stark contrast to the 456-million-krona loss recorded in the same period last year.

Revenue also surged by 27 percent year-over-year to 13.3 billion krona, demonstrating strong growth across its global operations.

Siemiatkowski expressed optimism about the company's future, citing strong growth in the US market, continued expansion of its global network, and the role of AI in driving efficiency and lowering costs.

"If I can get to a superior revenue per employee that will allow us to pay top class for the best talent, the people who are currently deep-diving and learning AI . . . The very strong message to our employees is: less total labor cost, higher cost per individual. I'm very happy about seeing that this is paying off," he said.

This article originally appeared on our sister site, Computing.