Swedish fintech company Klarna, known for its “buy now, pay later” services, is reversing its decision to replace human workers with artificial intelligence. In a significant shift that began in 2022, Klarna laid off around 700 employees and embraced AI-powered systems, primarily through a partnership with OpenAI. This transition was aimed at improving efficiency and reducing costs.
By 2023, Klarna had completely halted its recruitment of human workers. The company relied heavily on generative AI to handle tasks such as translation, data analysis, and art production. Klarna claimed at the time that its AI customer service agents were performing work equivalent to 700 human employees. CEO Sebastian Siemiatkowski even stated in December 2024 that “AI can already do all of the jobs that we, as humans, do.”
Quality Issues Force a Strategic Reversal
Despite initial optimism, the company has now acknowledged that the shift to AI has negatively impacted service quality. In recent interviews, Siemiatkowski admitted that cost-cutting had been given too much importance when implementing the AI systems.
“Cost unfortunately seems to have been a too predominant evaluation factor when organising this, what you end up having is lower quality,” he told Bloomberg.
Siemiatkowski also emphasized the importance of retaining a human presence in customer service. He said, “From a brand perspective, a company perspective, I just think it’s so critical that you are clear to your customer that there will always be a human if you want.”
The company is now planning a large-scale recruitment drive to bring back human workers, particularly in customer service roles. Klarna intends to offer remote positions, targeting students and people in rural areas. This new model resembles a gig economy approach, allowing employees to log in on-demand.
Broader Industry Trend and Public Backlash
Klarna is not alone in experiencing issues with overreliance on AI. Similar moves by other companies have sparked debate about the effectiveness of replacing humans with machines. Duolingo, for instance, announced that it would phase out contractor roles in favor of AI and automate performance reviews. CrowdStrike, a cybersecurity firm, also laid off 5% of its workforce, shifting some of that work to AI systems.
However, many companies are now seeing the limitations of this approach. A January 2024 survey of 1,400 executives showed widespread dissatisfaction with AI integration, with many citing a lack of talent and underwhelming results. In the UK, a survey revealed that 55% of business leaders who had replaced humans with AI regretted the decision.
From Layoffs to Rehiring: Klarna’s U-Turn
Klarna’s pivot to AI was not only controversial for its workforce impact but also for how it was executed. The 2022 layoffs were announced via a pre-recorded video, and the public release of personal data of dismissed employees drew further criticism.
Despite this, the company pressed forward with AI-driven operations and even celebrated a $10 million reduction in marketing costs. Now, just two years later, it is adjusting course.
Although Klarna still plans to gradually reduce its workforce to around 2,500, the company's recent strategy marks a recognition that not all roles can be fully automated. It has learned that the human element remains essential in maintaining service quality and brand integrity.
By 2023, Klarna had completely halted its recruitment of human workers. The company relied heavily on generative AI to handle tasks such as translation, data analysis, and art production. Klarna claimed at the time that its AI customer service agents were performing work equivalent to 700 human employees. CEO Sebastian Siemiatkowski even stated in December 2024 that “AI can already do all of the jobs that we, as humans, do.”
Quality Issues Force a Strategic Reversal
Despite initial optimism, the company has now acknowledged that the shift to AI has negatively impacted service quality. In recent interviews, Siemiatkowski admitted that cost-cutting had been given too much importance when implementing the AI systems.
“Cost unfortunately seems to have been a too predominant evaluation factor when organising this, what you end up having is lower quality,” he told Bloomberg.
Siemiatkowski also emphasized the importance of retaining a human presence in customer service. He said, “From a brand perspective, a company perspective, I just think it’s so critical that you are clear to your customer that there will always be a human if you want.”
The company is now planning a large-scale recruitment drive to bring back human workers, particularly in customer service roles. Klarna intends to offer remote positions, targeting students and people in rural areas. This new model resembles a gig economy approach, allowing employees to log in on-demand.
Broader Industry Trend and Public Backlash
Klarna is not alone in experiencing issues with overreliance on AI. Similar moves by other companies have sparked debate about the effectiveness of replacing humans with machines. Duolingo, for instance, announced that it would phase out contractor roles in favor of AI and automate performance reviews. CrowdStrike, a cybersecurity firm, also laid off 5% of its workforce, shifting some of that work to AI systems.
However, many companies are now seeing the limitations of this approach. A January 2024 survey of 1,400 executives showed widespread dissatisfaction with AI integration, with many citing a lack of talent and underwhelming results. In the UK, a survey revealed that 55% of business leaders who had replaced humans with AI regretted the decision.
From Layoffs to Rehiring: Klarna’s U-Turn
Klarna’s pivot to AI was not only controversial for its workforce impact but also for how it was executed. The 2022 layoffs were announced via a pre-recorded video, and the public release of personal data of dismissed employees drew further criticism.
Despite this, the company pressed forward with AI-driven operations and even celebrated a $10 million reduction in marketing costs. Now, just two years later, it is adjusting course.
Although Klarna still plans to gradually reduce its workforce to around 2,500, the company's recent strategy marks a recognition that not all roles can be fully automated. It has learned that the human element remains essential in maintaining service quality and brand integrity.
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