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Report from FXC Intelligence explores the tech company’s future as it plans to replace half its workforce with AI by the end of 2025, with takeaways that may be helpful to ACA member companies exploring AI.
09/11/2024 9:00 A.M.
2 minute read
Klarna, the Sweden-based financial technology company, is on track to halve its workforce by the end of 2025 through the use of artificial intelligence, according to an article from FXC Intelligence.
A leading provider of cross-border payments data and intelligence, Klarna’s aggressive adoption of AI is helping the company cut costs and return to profitability after years of financial losses, according to the article. However, this strategy is impacting employee satisfaction, as evidenced by a significant drop in its Glassdoor rating from 3.8 in 2022 to 3.0 this month.
Klarna said it wants to reduce its headcount to 2,000 employees by the end of 2025. If the company maintains its current rate of role reductions, which included the elimination of 1,200 jobs over the last year through AI implementation and a hiring freeze, it will achieve this target. However, if the pace of reductions slows to a 10% year-over-year decline, the company would still reach its goal, but not until the latter half of 2026, according to an analysis from FXC Intelligence.
AI has helped Klarna set the stage for a potential U.S. initial public offering (IPO) as early as next year. In 2021, Klarna was valued at $45.6 billion, but its valuation plummeted to $6.7 billion in 2022, largely due to a broader economic slowdown impacting the tech sector. To regain some of its former valuation, Klarna is focusing on reducing headcount while sustaining revenue growth, and AI is central to this strategy.
“Klarna has arguably embraced AI more aggressively than any other company in the payments industry, which is likely to be key to it returning to profitability and so netting a higher valuation when it has its IPO. However, such a wholehearted embrace of AI has its drawbacks,” said Lucy Ingham, editor-in-chief and head of content at FXC Intelligence. “Our analysis suggests the initiatives have harmed employee satisfaction, which may create long-term challenges for the company around the retention of high-value employees, particularly when it becomes publicly traded. Klarna has also made itself highly reliant on OpenAI to supply the tools that are now integral to many of its operations, which could pose a problem if anything were to happen to the AI player in the future.”
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