Buy-now, pay-later giant Klarna has been making bold assertions that AI will replace its ambitious tech workers, and the company’s CEO just gave the biggest hint yet to his employees that hundreds of them shouldn’t expect to retire at the group.
Klarna’s cofounder and chief executive Sebastian Siemiatkowski indicated he hopes to shrink his workforce to a magic number of 2,000 in the coming years, falling from a peak of 5,000 at one point.
“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,” Klarna boss Sebastian Siemiatkowski told the FT .
Klarna has been one of the most significant acolytes of AI since the advent of large language models two years ago and its potential for mass headcount reduction.
In February, the company said its AI chatbot , built in collaboration with OpenAI, was doing the work of 700 customer service agents.
While Klarna outsources customer service work, it also hopes AI can do the work of several marketing employees.
It has begun to hail the benefits of AI on its bottom line.
On Tuesday, Klarna said revenues had risen 27% in the first half of 2024 compared with the same period in 2023. It added that revenue per employee had grown from SEK 4 million ($393,000) to SEK 7 million ($689,000) over the last year.
The contribution of AI to this growth, though, may be overstated.
Klarna is benefitting from falling interest rates this year, while many tech companies are experiencing rising revenue per employee as they trimmed headcount after acknowledging they overhired during the COVID-19 boom.
Headcount reduction
Siemiatkowski’s “directional” target, which would involve nearly having Klarna’s workforce, is already underway.
The BNPL group has trimmed its headcount from a peak of 5,000 to 3,800, and last year, its CEO announced a hiring freeze thanks to the growth of AI applications at Klarna.
“We are in the fortunate position of being a growing company, so for Klarna, AI enables us to grow more quickly without adding headcount as quickly as we would have done previously,” Siemiatkowski said last year.
“We’re seeing across our whole business that things that previously took people a lot of time can be done much faster and much shorter with the help of ChatGPT, and we need fewer people to do the same thing.
“So, except for engineering, we’re taking the approach to say, ‘Let’s not recruit now, let’s see how this plays out.’”
Klarna’s long-term view is that, through natural attrition, employees will leave the company, as is common in the tech sector, as workers take better-paid positions elsewhere or simply fancy a change. Klarna currently doesn’t plan to introduce a round of layoffs to speed up these exits, Fortune understands.
The company maintains it hasn’t brought in traditional tactics used by other firms looking to encourage departures, such as restricting promotions, stopping pay raises, or placing more staff on dreaded performance improvement plans .
It is, however, largely choosing not to backfill roles when an employee does leave.
How Klarna’s employees will receive the message that they won’t always be welcome is unclear, but one thing is—they shouldn’t get too comfortable.
Each of Siemiatkowski’s public comments will be made with Klarna’s much-anticipated initial public offering (IPO) in mind.
He hasn’t commented publicly on plans for an IPO and is likely biding his time after the company’s market value crashed from a peak of $40 billion to $6.7 billion amid a broader market downturn.
Many of Klarna’s in situ employees, though, may never see the day their company cashes in on the public market.
This story was originally featured on Fortune.com
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