What you need to know
- Klarna, a Swedish fintech company, laid off 1,000 of its employees and plans to cut 2,000 more from its workforce as part of its strategy to integrate AI into its workflow.
- The company suffered immense losses while expanding its operations to the US, but it has since become profitable with attribution to its AI strategy.
- Its custom chatbot can handle the workload assigned to 700 customer service employees, scaling the average resolution time for customer service inquiries from 11 minutes to 2 minutes.
In an odd but not entirely surprising turn of events, AI has begun the hostile takeover of jobs from professions. Despite Microsoft’s updated Services Agreement, some companies are substituting professionals with AI, not treating it as a mere guide.
Klarna, a Swedish financial services firm, is on course to lay off approximately half of its employees as part of its broader AI strategy. Over the past year, the financial institution laid off more than 1,000 employees due to the prevalence of AI. Klarna plans to send 2,000 employees home, potentially augmenting their roles using AI (via International Business Times).
To this end, the timeline for these expected layoffs remains unclear. However, according to Klarna’s interim financial report, the company attributed the drastic changes in its workforce to a reliance on artificial intelligence.
“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,” added Klarna CEO Sebastian Siemiatkowski.
The company further explains that its custom AI-powered chatbot can handle the workload assigned to 700 customer service employees. In addition, the new approach has scaled down the average resolution time for customer service inquiries from 11 minutes to 2 minutes. The financial institution says the new approach boasts better customer ratings and reviews.
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Klarna’s custom AI chatbot is also leveraged to facilitate the company’s marketing efforts. While the massive layoffs at the company are concerning, Klarna CEO Sebastian Siemiatkowski told BBC that it would present the opportunity to offer the remaining workers generous pay packages.
AI is generating revenue for Klarna
Per the interim financial report, the company reported a 27% increase in revenue, translating to 13.3 billion Swedish krona (£990 million). Before integrating AI into its workflow, the institution was in a financial crisis, with a loss of 456 million krona. The company’s new AI strategy and mass job cuts helped it recover the losses, turning it into a profitable venture.
According to the report:
“Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits.”
The company previously enjoyed making profits until 2019, when it started experiencing losses as it expanded its operations in the United States. This significantly impacted its market valuation, pushing it from $46 billion to $6.7 billion between 2021 and 2022.
Siemiatkowski says the company could consider an initial public offering (IPO). “We have not yet taken any decisions. It will happen in due course,” the CEO concluded.
