'We Stopped Hiring!': FinTech CEO Reveals How AI Replaced Hundreds of Employees in a Year

Klarna's CEO, Sebastian Siemiatkowski, has fully embraced artificial intelligence as a transformative force within the fintech company - influencing a major part of his company: the workforce.

In a recent Bloomberg TV interview, he revealed that he decided to pause hiring a year ago and that it stemmed from AI's ability to automate tasks previously handled by humans.

Siemiatkowski expressed confidence in AI's potential, stating, "It's just a question of how we apply it and use it."

Klarna's AI-First Approach

Klarna, a payment service offering "buy now, pay later" options, boasts a network of over 575,000 retail partners, as stated on its website.

His company's growth has coincided with a broader technological shift, particularly the surge in AI interest, which has raised concerns about its potential impact on jobs and the workforce.

A 2023 McKinsey & Company report predicts that 12 million American workers will need to transition to new occupations by 2030 due to advancing AI technology.

This trend is mirrored in companies like Klarna, as Siemiatkowski revealed that the company ceased hiring a year ago. 'I think what we've done internally hasn't been reported as widely,' he said.

'We stopped hiring about a year ago, so we were 4,500, and now we're 3,500. We have a natural attrition like every tech company. People stay for about five years, so 20% leave every year. By not hiring, we're simply shrinking, right?' Siemiatkowski said.

The Human Cost Of AI-Driven Job Cuts

Siemiatkowski shared the company's message to employees: 'What's going to happen is the total salary cost of Klarna is going to shrink, but part of the gain of that is going to be seen in your paycheck.'

Klarna has already cut its workforce by over 1,000 employees in the past year, a move partly attributed to increased AI adoption.

An August report indicates the buy-now, pay-later company is preparing to reduce its workforce by nearly 50 percent as AI automation becomes more widespread.

While Klarna's website currently lists open positions, a spokesperson clarified to Business Insider that the company is not actively recruiting to expand its workforce.

Instead, Klarna is focused on filling specific essential roles, primarily in engineering.

The AI Job Apocalypse: Companies Cutting Back

The company's aggressive AI adoption and subsequent job cuts have made headlines, it's not an isolated incident in the tech industry.

Several other tech giants and companies across industries are adopting similar strategies. Here are some of them:

1. MSN: The prominent US web portal was among the early adopters of AI-driven journalism. Since 2020, the company has relied on AI to generate news content, leading to the layoff of numerous journalists, according to a 2020 report by The Seattle Times.

2. Google: The tech giant kicked 2024 off with multiple rounds of layoffs, primarily affecting its ad division. While the company hasn't directly linked these job cuts to AI, the timing aligns with its significant AI investments in customer care and ad sales processes.

3. Dukaan: Indian e-commerce company Dukaan garnered significant attention when it replaced 90 percent of its customer support staff with an AI chatbot.

CEO Summit Shah publicly defended this decision, highlighting substantial cost savings and reduced customer wait times.

4. Ikea: The global furnishing bran is undergoing a significant transformation in its call centre operations, introducing an AI bot named Billie.

In a unique approach, Ikea is retraining affected employees to assume new roles as interior design advisors.

5. BlueFocus: Chinese marketing agency BlueFocus made a significant operational shift by replacing human content writers and designers with generative AI shortly after acquiring an AI service license.

6. Salesforce: The American cloud-based software company recently laid off around 700 employees, sparking speculation that AI may be poised to fill these roles as the company intensifies its focus on artificial intelligence.

7. Duolingo: In January, Duolingo reduced its contractor workforce by 10%, citing the adoption of AI for content translation as a contributing factor.

8. Turnitin: Renowned for its AI detection platform, the company laid off 15 employees in late 2023. The company's CEO suggested that AI-driven efficiency could result in a 20 percent workforce reduction by mid-2024.

Companies Planning AI-Driven Workforce Reductions

While numerous companies have already integrated AI into their operations and implemented job cuts, several tech giants are on the brink of significant workforce reductions driven by AI advancements.

1. IBM: IBM has unveiled plans to gradually replace 30 percent of its back-office roles with AI over the next five years, impacting approximately 7,800 positions.

The company has already scaled back hiring for certain clerical roles, anticipating more substantial changes in the coming decade.

2. BT Group: British telecommunications giant BT Group plans to eliminate around 55,000 jobs by 2030, with AI-driven solutions taking over approximately 10,000 of these roles.

While the company maintains that not all customer service positions will be automated, AI is poised to become a pivotal component of its future workforce.

As AI continues to evolve, its impact on the job market is undeniable. While it offers potential benefits, it also raises concerns about job displacement and economic inequality. It's crucial to strike a balance between technological advancement and human well-being.