Klarna Slashes Workforce by 24% as AI Transforms Its Operations

Klarna, the buy-now-pay-later (BNPL) company, has made significant changes to its workforce over the past year, reducing its number of employees from 5,000 to 3,800. This reduction, largely driven by the integration of artificial intelligence (AI) into the company’s operations, is part of a broader strategy as Klarna prepares for a potential stock market listing as early as next year.

Key Takeaways

Klarna has cut its workforce from 5,000 to 3,800 over the past year, mainly due to the adoption of AI technology.

Their AI assistant now does the work of 700 employees, reducing the time it takes to resolve issues by 81%.

The company is exploring the possibility of going public as early as next year, with a potential listing in the US.

AI Driving Efficiency and Workforce Reduction

On August 27, Klarna released its interim results, shedding light on how AI is reshaping the company. The introduction of an AI assistant has been a game changer, taking over tasks that previously required 700 employees. This shift has drastically cut the average time to resolve customer inquiries from 11 minutes to just two, showcasing the efficiency AI brings to the table.

The AI-driven improvements have not only enhanced customer service but also significantly reduced operating expenses. Klarna's CEO, Sebastian Siemiatkowski, noted that the reduction in workforce was mainly due to natural attrition—employees leaving on their own, rather than being laid off. Siemiatkowski explained, “By simply not hiring, which we haven’t done since September, the company is kind of becoming smaller and smaller.”

He also mentioned that the workforce could eventually shrink to around 2,000 employees, although no specific timeline was provided. The impact of these changes is evident in the company’s productivity, with the average revenue per employee increasing by 73% over the past 12 months, rising from 4 million crowns to 7 million crowns.

Industry-Wide Impact of AI Integration

Klarna's approach mirrors a growing trend across various industries, where AI is increasingly taking over tasks traditionally done by humans. Recent studies from McKinsey, the IMF, and Goldman Sachs suggest that AI could replace around 40% of jobs, with customer service being one of the most affected areas.

Despite the reduction in its workforce, Klarna has reported strong financial results. The company’s revenue rose by 27%, reaching 13.3 billion Swedish krona (approximately $1.3 billion), and it swung to an adjusted profit of 673 million krona, a significant turnaround from a loss of 456 million krona the previous year. This recovery follows a period of financial struggles that began in 2020 after a rapid expansion into the US market.

Looking Ahead: Klarna’s Potential IPO

As Klarna continues to streamline its operations with AI, the company is also looking ahead to a potential initial public offering (IPO). While no specific plans have been confirmed, Siemiatkowski mentioned that a 2025 IPO “sounds reasonable.” The company is considering listing in the US, although European options are also being explored.

According to Chrysalis Investments, a major Klarna investor, the fintech firm could achieve a valuation of between $15 billion and $20 billion at an IPO.

Preparing for the AI-Driven Future

As AI continues to integrate into business operations, companies like Klarna must develop comprehensive strategies to manage the changing workforce landscape. The move towards AI-driven efficiency is inevitable, but it also brings challenges that organizations need to navigate carefully. Klarna’s journey highlights the opportunities and complexities of this transition, offering a glimpse into the future of work.