Klarna employees, including engineers and people in marketing, are being told their jobs are no longer needed and reassigned to customer support, after its CEO acknowledged that earlier AI-driven cost-cutting went too far.
Founded in 2005, the buy-now, pay-later firm plans to IPO soon, seeking to raise up to $1.27 billion, according to an SEC filing on Tuesday. As Klarna prepares to go public, the firm has recently been informing staff that their roles are no longer required, redirecting them into customer support positions via an internal talent pool, according to three current employees who spoke on condition of anonymity as they were not authorized to speak publicly.
The company has talked up AI as it’s geared up for its New York Stock Exchange debut, eliminating over 1,200 external SaaS tools, restructuring teams, and placing some employees in the talent pool, Business Insider previously reported.
But the latest move points to a growing reality: doubling down on AI isn’t always the cure-all that companies expect. While it can trim costs and streamline operations, overreliance on AI can lead to unintended consequences like a worse customer experience.
McDonald’s removed its Automated Order Taker technology from over 100 restaurants last year after a series of mishaps with the tech went viral. But some companies, including Salesforce, continue to replace human workers with AI agents in their customer support divisions in a bid to unlock efficiencies.
The use of AI chatbots in customer service can sometimes lead to inaccurate information, or so-called “botshit.”
A spokesperson for Klarna declined to comment.
Employees across several areas of the company — business operations, analytics, marketing, engineering, and legal — have been told their role or area of focus is no longer a priority before being placed in the talent pool to await reassignment.
The talent pool is a group of employees whose roles have been eliminated, but who remain on the payroll while they await new opportunities within Klarna that align with their skills. If no suitable role is found, they may either be offered an exit package or choose to resign. Klarna insiders previously likened it to “a sneaky way of carrying out quiet layoffs.”
Some employees who were placed in the talent pool, including a few who were in senior positions, were later offered roles in the company’s customer success team, which is led by chief operating officer Camilla Giesecke, the employees told Business Insider.
Earlier this year, Klarna introduced a weekly Monday session known as “Action Day,” bringing together employees from multiple divisions to review customer app recordings and purchase flow data from user experience analytics platform Fullstory, the people Business Insider spoke to said.
The initiative was designed to analyze purchasing behavior and identify barriers that prevent customers from completing transactions. Initially held as a full-day event, the meetings were scaled back to half a day in May after some employees were concerned the format was cutting too deeply into time needed for other projects, the three people said.
The company said last year that its AI assistant was doing the work equivalent to 700 customer support agents as it froze hiring except for engineers. Last August, CEO Sebastian Siemiatkowski said in an X post that “AI allows us to be fewer in total.”
The Klarna chief wrote in another X post in February that the company “had an epiphany”, realizing that in the AI age “nothing will be as valuable as humans.” He added that it would start working towards being “the best at offering a human to speak to.”
Siemiatkowski announced that Klarna was testing out a gig work model to hire customer service agents during an interview with Bloomberg in May, in which he said his cost-cutting push went too far.
“As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality,” he told Bloomberg. “Really investing in the quality of the human support is the way of the future for us.”
While many companies embrace AI in customer support, some like Starbucks are increasingly leaning on humans to offer a better customer journey.
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