Klarna, a Swedish buy-now-pay-later company, is set to reduce its workforce by half, relying on artificial intelligence to drive efficiency and cost savings.
CEO's Vision
CEO Sebastian Siemiatkowski stated to the Financial Times that Klarna could effectively operate with only half of its current staff. The company has already downsized its employees from 5,000 to 3,800 in the past year and aims to further reduce it to around 2,000 employees in the near future. Siemiatkowski emphasized that leveraging AI would allow Klarna to achieve more with fewer resources.
Cost-saving Initiatives
In a post on X in May, Siemiatkowski mentioned that Klarna had saved significant amounts by reducing expenses on photographers, image banks, and marketing agencies. The company witnessed increased productivity within its marketing team, which operated with half the workforce compared to the previous year.
AI Implementation
Klarna paused hiring for non-engineering positions last year, turning to AI technology to fill the voids left by departing employees. The company claimed in a February blog post that its AI assistant could handle the workload equivalent to 700 full-time employees. The AI chatbot not only surpassed human agents in errand resolution accuracy but also matched human employees in customer satisfaction levels. Klarna anticipated that AI advancements could contribute $40 million to its profits this year.
Industry Adaptation
Klarna's competitor, Affirm, is also investing in AI chatbots, although it is not actively reducing its staff. Affirm's CEO Max Levchin noted that AI could lead to cost savings over the next few years without immediate job displacements.
Tech Industry Trends
Various tech companies, including Dell, Google, and Apple, have undergone significant staff reductions as they transition towards AI-centric operations. Layoffs in the tech sector, amounting to over 350,000 employees since the beginning of 2023, were partly attributed to reallocating capital for AI investments. Meta and Google CEOs emphasized the necessity of layoffs to facilitate long-term AI-focused strategies.
Financial Impact
Klarna credited AI for its improved financial performance, with net losses decreasing from 854 million Swedish Krona to 10 million Krona in the recent quarter. The company also reported a substantial increase in revenue and revenue per employee over the past year. Klarna is preparing for a potential IPO in the upcoming year, although official decisions are pending.
Klarna did not provide a comment in response to a request from BI outside regular business hours.
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By: lwee@insider.com (Lian Kit Wee)
Title: Klarna to Halve Workforce, Boosting AI Efficiency and Cutting Costs
Sourced From: www.businessinsider.com/klarna-smaller-workforce-ai-boost-revenue-productivity-cost-savings-ipo-2024-8
Published Date: Wed, 28 Aug 2024 06:21:25 +0000
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