“Our chatbots perform the tasks of 700 people” with better customer ratings: AI takes center stage as a Swedish fintech shrinks its workforce by half
Klarna plans to use AI to achieve more with fewer employees.
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What you need to know
This article has been update to reflect that Klarna isn’t laying off its employees. The tech company aims to leverage AI to achieve more with fewer employees. As such, whenever an employee departs, the company doesn’t hire a replacement. According to the company, approximately 20% of its employees leave for new roles in other organizations annually, thus allowing it to scale down its workforce significantly.
In an odd but not entirely surprising turn of events,AI has begun the hostile takeover of jobs from professions. DespiteMicrosoft’s updated Services Agreement, some companies are substituting professionals with AI, not treating it as a mere guide.
Klarna, a Swedish financial services firm, plans to integrate AI into its workflow, allowing it to do more with fewer employees. Over the past year, the financial institution’s workforce has shrunk from 5,000 employees to 3,800.
According to Klarna, approximately 20% of its employees leave the company every year for new roles in new companies. However, the tech company doesn’t hire new employees to replace those who leave. This has allowed it to effectively reduce the size of its workforce by 20% annually.
Klarna’s interim financial report attributed the drastic changes in its workforce to a reliance on artificial intelligence. “AI is allowing us to do more with fewer employees, which allows us to reduce the number of employees at the company,” Klarna told Windows Central.
“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 toldBBCthat 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.
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Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry at Windows Central. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. You’ll also catch him occasionally contributing at iMore about Apple and AI. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.
