The CEO of ‘buy now, pay later’ company Klarna has said that he believes the company can run on around half of its current workforce thanks to the increasing use of AI in its operations.
Sebastian Siemiatkowski stated his belief that the company can “do much more with less” and that it could function in the future with around 2,000 workers – that’s 1,800 fewer than it currently employs.
The comments came in interviews conducted by Siemiatkowski ahead of Klarna’s listing on the stock exchange. With many companies already replacing workers with AI this year, it is thought that the cost cutting strategy will make the company a more attractive proposition for investors during the flotation.
Less Labor, Higher Profits
In an interview with UK newspaper the Financial Times, Siemiatkowski – who also co-founded Klarna – said that he thinks that a staff of 2,000 people will be enough to deliver the results he wants.
Considering that at one point last year the company had a workforce 5,000 strong, that’s a significant reduction.
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Siemiatkowski envisages the biggest staff reductions to come in Klarna’s customer service and marketing departments, which is where AI tasks can be implemented most effectively.
With the fintech company recently having made its first quarterly net profit in over four years, he said that cutbacks and the implementation of AI would be necessary to ensure future profitability. While also making the point that the 2,000 remaining workers would see a positive development in the form of higher pay – particularly “the people who are currently deep-diving and learning AI.”
“The very strong message to our employees is: less total labor cost, higher cost per individual.” – Sebastian Siemiatkowski, CEO of Klarna
Shrink, Don’t Slash
While the potential cut in Klarna’s workforce sounds dramatic, Siemiatkowski suggests that large scale job slashing may not be necessary.
Not wishing to put a specific deadline on the reduction, he told the BBC’s Today radio program that natural employment churn would help bring down the numbers.
“In a tech company like ours, about 20% of people leave on an annual basis just to go and work elsewhere. People stay about 5 years.”
He repeated this on a X, formerly Twitter, in a post shortly afterwards:
I tell journalists same as all our employees for months:
– AI allows us to be fewer in total
– This means lower cost in total
– Employees stay on average 5 years in tech companies
– Almost fully stopping recruitment means shrink by 20% / y through natural leave
– Savings are…— Sebastian Siemiatkowski (@klarnaseb) August 28, 2024
AI’s Dramatic Impact on Jobs
Siemiatkowski did acknowledge in the radio interview, however, that he believed AI would have a “dramatic impact on jobs” and that governments should be taking action now to account for that:
“I think it’s critical for government to consider what could we do for the group that could be affected, but while at the same point of time, not stop progress because it’s important that Europe and the democracies are ahead in the evolution of AI.”
Companies have already begun downsizing their workforces, with an inverse correlation in their use of AI.
A large round of cuts at Google in January, for example, was widely believed to be related in the company’s pivot towards AI technology. Big tech players like MSN, Salesforce and Duolingo have all followed suit, with Dell expected to cut around 12,000 staff as it embraces AI to streamline its business.
