Sweden’s Klarna shrinks workforce with AI chatbots

Stockholm — Swedish payments group Klarna said it had reduced hundreds of jobs and expected more reductions to come as it implemented artificial intelligence (AI) to handle customer queries, saying on Tuesday chatbots could sharply reduce the time taken to resolve issues.

The “buy now pay later” company, widely expected to seek a stock market listing next year, has been one of the early adopters of GenAI to cut costs and boost productivity.

The company, which said it had swung to a first-half adjusted profit of 673-million Swedish kronor ($66m), said its AI assistant was performing the work of 700 employees, reducing the average resolution time from 11 minutes to just two.

“About 12 months ago, we would have been about 5,000 active positions within the company, and we are now down to about 3,800,” CEO Sebastian Siemiatkowski said, adding that almost all of the reduction had been achieved through attrition, not layoffs.

“By simply not hiring, which we haven’t done since September … the company is becoming smaller,” he added.

Average revenue per employee over the past 12 months had increased by 73%, rising from 4-million kronor to 7-million.

“We will continue to not recruit anything other than engineers for a significant time,” he said, adding that the headcount could eventually fall to 2,000, without giving a time frame.

At the time of a peak valuation of $46bn in 2021 — on the basis of a fundraising carried out at the time — Klarna was unprofitable with much less revenue and had about 7,000 employees.

While total labour costs would fall, Klarna expected to pay much more per individual, the company said.

Klarna also reported first-half revenue of 13.3-billion kronor, up 27% from a year before and boosted by revenue growth of 38% in the US. Its adjusted profit compares with a loss of 456-million kronor last year.

Siemiatkowski said an IPO next year “sounds reasonable”, but there was no definite commitment by the company yet. He said Klarna might lean towards a US listing, but had also seriously evaluated some European options.

Reuters