A published report Wednesday indicated that Swedish fintech company Klarna is “seeking to get rid of almost half of its employees in the coming years through efficiencies it says arise out of its investment in AI.”
The article noted that the company has already reduced its head count from 5,000 to 3,800, and wants to reduce its workforce to 2,000 by using AI in marketing and customer service. Sebastian Siemiatkowski, CEO and co-founder of the company, which provides payment processing services for the e-commerce sector, told the BBC that “the job cuts would mean Klarna could pay its remaining workers more.”
Klarna’s plans should not come as a surprise, given the firm was the first fintech globally to launch a ChatGPT plug-in soon after the launch of the technology in November 2022. On its website, OpenAI has a customer story in which Siemiatkowski proudly boasts, “we push everyone to test, test, test, and explore. As Klarna continues to discover applications for OpenAI’s tech, there’s the potential to take the business to new heights.”
The testimonial notes that, within the first month of the plug-in being live, the AI assistant “has had 2.3 million conversations, two-thirds of Klarna’s customer service chats, it is doing the equivalent work of 700 full-time agents (and) it is on par with human agents in regard to customer satisfaction score.”
In addition, he said, “it is more accurate in errand resolution, leading to a 25% drop in repeat inquiries, it’s available in 23 markets, 24/7, and communicates in more than 35 languages (and) it’s estimated to drive a $40 million profit improvement to Klarna in 2024.”
Responding to the company’s AI plans, Terra Higginson, principal research director at Info-Tech Research Group, said Wednesday, “AI is here to enhance employee success, not render them obsolete. A key trend for 2025 will be AI serving as an assistant rather than a replacement. It can remove the drudgery of mundane, monotonous, and stressful tasks.”
“(Organizations) that are thinking of making such drastic cuts should look into the well-proven productivity paradox and tread carefully,” she said. “There is a lot of backlash against companies that are making cuts like this.”
In June, a study in the Harvard Business Review (HBR) concluded that, when it comes to the potential AI is or can have on human beings, the initial euphoria of having fewer mundane tasks to perform soon gives way to fears of job loss. Employees, findings revealed, “suffered profound sadness and isolation shortly after routine tasks were automated by AI.”
“Interactions with AI made them more efficient and capable of doing much more work, but at the same time left them feeling lonely, which resulted in employees being more likely to resort to alcohol and suffer from insomnia,” the study said, adding that these were “telltale and worrying signs of social malaise and ill-being, which research shows have negative impacts on quality of life, mood, cognitive function, behavior, and health overall.”
The upshot of the research is that CIOs need to emphasize their focus on technology users and make them feel valued and important. That can mean reenvisioning how the workforce needs to function, including possibly retraining many of them.
“Many organizations have lost sight of their most important asset — the humans whose jobs are being fragmented into tasks that are increasingly becoming automated. From a human-centered perspective, this may be a worrying trend, as a primary focus on technology may bring unwanted human costs such as reducing job satisfaction, motivation, and mental well-being,” HBR said. “If you want to make AI adoption projects successful and viable, you need to focus on humans first and AI second.”
Other research agrees. Earlier this month, the recently-formed AI-Enabled ICT Workforce Consortium’s inaugural report indicated 92% of IT jobs will see a high or moderate transformation due to advances in AI.
Francine Katsoudas, director of people, policy, and purpose at Cisco, the company leading the consortium, said, “AI represents an unprecedented opportunity for technology to benefit humanity in every way, and we need to be intentional about making sure people are not left behind.”
