Klarna plans to hire half as many employees as it did last year, betting on using artificial intelligence to boost efficiency and cut costs.
CEO Sebastian Šmiatkowski said in a statement to the Financial Times that the company could operate efficiently with half its current staff. The Swedish “buy now, pay later” company has reduced its workforce from 5,000 to 3,800 over the past year, the Financial Times reported on Tuesday.
The company plans to further reduce its workforce to about 2,000 over the next few years. Mr. Siemiatkowski said the company's use of AI will enable it to “do more with less.”
In a May post on X, Simiatkowski wrote that the company had saved millions of dollars by “reducing spending on photographers, image banks and marketing agencies.”
He added that the marketing team was working at half the size it was last year, which had increased productivity.
Klarna stopped hiring for most positions outside of its engineering team last year as it increased its reliance on AI technology to fill gaps created by departing staff.
In a February blog post, the company claimed its AI assistant could handle the workload of 700 full-time employees. Klarna said the chatbot outperformed human agents in “message resolution” accuracy and matched human employees in customer satisfaction.
Klarna also predicted that the technology could add $40 million to its profits this year.
Meanwhile, Klarna competitor Affirm is also focusing on AI chatbots but has not publicly called for job cuts.
“This is not a short-term cost savings because no one at Affirm has lost their job yet to be replaced by a robot,” CEO Max Levchin said on an earnings call in May, adding that AI could lead to cost savings for the company over the next one to three years.
AI will dramatically change the way technical staff work
Other tech companies are also cutting jobs as they shift to more AI-centric businesses.
Earlier this month, Dell announced a major restructuring of its sales division that led to mass layoffs.
According to data from online tracker Layoffs.fyi, tech companies including Google and Apple have laid off more than 350,000 employees since the beginning of 2023. Many of these layoffs are due to overhiring during the pandemic, but the need to reallocate capital towards AI investments is also a major driver of the layoffs.
Meta CEO Mark Zuckerberg said on the company's earnings call in February that the cuts were necessary to invest in the company's “long-term, ambitious vision for AI.”
Google CEO Sundar Pichai also wrote in a January memo that the cuts were necessary to “create capacity to invest” in AI.
Klarna credited AI for its improved financial performance, as its net loss narrowed from 854 million Swedish kronor (about $84 million) in the second quarter of 2023 to 10 million Swedish kronor (about $900,000) in the most recent quarter.
The company also reported a 27% increase in revenue over the 12-month period, and a 73% increase in revenue per employee.
Klarna is preparing for an initial public offering (IPO) as early as next year, but Simiatkowski told the Financial Times that the company has not yet made a decision on an IPO.
Klarna did not respond to a request for comment from BI sent outside normal business hours.
