Buy now, pay later giant Klarna has boldly claimed that AI will replace its aspiring technologists, and its CEO has just given employees its biggest hint yet that they shouldn’t expect hundreds of them to retire as a group.
Klarna co-founder and CEO Sebastian Siemiatkowski has suggested he wants to reduce the company’s workforce from a peak of 5,000 to the magic number of 2,000 over the next few years.
“Not only can we do more with less, but we can do more with less. We have about 2,000 people in the company. [employees]”We don’t want to set a specific deadline,” Klarna President Sebastian Siemiatkowski said. FT.
Klarna has been one of AI’s biggest believers since the emergence of large-scale language models two years ago, leading to the possibility of massive job cuts.
In February, the company announced that an AI chatbot it developed in collaboration with OpenAI was replacing 700 customer service representatives.
While Klarna outsources its customer service operations, it also hopes that AI can take over the work of several marketers.
The company has begun to extolling the benefits AI can bring to its bottom line.
Klarna said on Tuesday that its revenue rose 27% in the first half of 2024 compared with the same period in 2023. It added that revenue per employee rose from 4 million Swedish kronor ($393,000) to 7 million Swedish kronor ($689,000) over the past year.
However, AI’s contribution to this growth may be overstated.
Klarna has benefited from lower interest rates this year, while many technology companies are cutting staff and increasing revenue per employee after acknowledging they overhired during the COVID-19 pandemic.
Workforce reduction
Mr. Simiatkowski’s “directional” goals, which include acquiring most of Klarna’s workforce, are already underway.
The BNPL group has reduced its headcount to 3,800 from a peak of 5,000, and last year its CEO announced a hiring freeze following the growth of AI applications at Klarna.
“We’re in the fortunate position of being a growth company, so for Klarna, AI will enable us to grow more quickly without adding headcount as quickly as we have in the past,” Siemiatkowski said last year.
“Across our company, we have found that tasks that previously took a long time for humans can now be performed much quicker and in less time with the help of ChatGPT, and we now need less manpower to do the same work.
“So, with the exception of engineering, we’re taking the approach of, ‘Let’s not recruit right now and see what happens.'”
Klarna’s long-term outlook is that, as is common in the tech industry, employees will leave the company through natural attrition, either for higher-paying jobs elsewhere or simply for career changes, and the company doesn’t currently plan to institute a round of layoffs to hasten those departures. luck I understand.
The company insists it has not deployed the traditional tactics used by other companies to encourage people to quit, such as limiting promotions, halting pay increases or forcing more staff to sign up for the feared performance improvement plan.
However, the company has largely chosen not to fill roles when employees leave.
It’s unclear how Klarna employees will take the message that they’re not necessarily welcome there, but one thing is for sure: they shouldn’t get too comfortable.
All of Simiatkowski’s public comments will be made with Klarna’s much-anticipated initial public offering (IPO) in mind.
He has not commented publicly about plans for an IPO, likely biding his time after the broader market downturn caused the company’s market capitalization to plummet from a peak of $40 billion to $6.7 billion.
But many of Klarna’s local employees may never see the day their company makes profits on the stock market.
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