Klarna CEO comments show the AI workplace everyone has been dreading is already here

• Klarna CEO Sebastian Siemiatkowski said that he plans to reduce the company's workforce by half.
• He said the company can "do much more with less" through artificial intelligence.
• The buy-now-pay-later company is gearing up to go public.

Klarna plans to employ half the people it did last year, betting on artificial intelligence to enhance efficiency and cut costs.

CEO Sebastian Siemiatkowski said in a statement to the Financial Times that the company could operate effectively with half its current staff, which numbered about 4,000 at the end of June. Siemiatkowski said the company can "do much more with less" using AI.

The Swedish buy-now-pay-later company lost about 24% of its staff in the last year, per its annual report . Spokesman Joel Hedin told Business Insider those losses were "natural attrition" and that with the company's hiring freeze, "headcount is gradually decreasing."

Last year, Klarna halted hiring for most positions outside its engineering team as it increasingly relied on AI technology to fill gaps left by departing staff.

In May , Siemiatkowski wrote in a post on X that the company had saved millions by "spending less on photographers, image banks, and marketing agencies."

He added that the marketing team had been more productive, working with half its size compared to the previous year.

In a February blog post , the company claimed its AI assistant could handle the workload of 700 full-time employees. Klarna said that the chatbot outperformed human agents in "errand resolution" accuracy and matched human employees in customer satisfaction levels.

Klarna also projected that this technology could boost the company's profits by $40 million this year.

Meanwhile, Klarna competitor Affirm is also doubling down on AI chatbots — but it isn't publicly seeking to cut its staff.

"No one has yet to lose their job to be replaced by robot at Affirm, so that's not a short-term cost saving," CEO Max Levchin said on a May earnings call , adding that AI could save the company money over the next one to three years.

AI shakes up tech staff

Other tech companies are axing staff as they transition to AI-centric businesses.

Earlier this month, Dell announced the significant restructuring of its sales division, resulting in mass layoffs.

Tech companies, including Google and Apple, have laid off over 350,000 workers since the beginning of 2023, according to data from online tracker Layoffs.fyi . While many of these layoffs were attributed to overhiring during the pandemic, the need to reallocate capital for AI investments is also a significant factor for the layoffs.

Meta CEO Mark Zuckerberg said in a February earnings call that layoffs were necessary to invest in "long-term, ambitious visions around AI."

Google CEO Sundar Pichai also wrote in a January memo that job cuts were needed to "create the capacity for investment" in AI.

Klarna had credited an improvement in its financial performance to AI, with net losses declining from 854 million Swedish Krona, around $84 million, during the second quarter of 2023, to 10 million Krona, around $900,000, in the most recent quarter.

The company also reported a 27% increase in revenue and a 73% increase in revenue per employee over 12 months.

Klarna is gearing up for an initial public offering as early as next year, although Siemiatkowski told the FT that the company has not made any IPO decisions yet.

Klarna did not respond to a request for comment by BI sent outside standard business hours.

Correction: August 28, 2024 — This story has been updated with a more exact headcount change and to specify why Klarna lost staff in the last year. After publication, a Klarna representative told Business Insider that the loss — about 24% of staff — came from natural attrition.