Buy now pay later payments service Klarna is actively recruiting again after re-evaluating its AI-driven customer service cost cutting plan and concluding that it needs to employ humans because its AI-first approach leads to lower quality.
Klarna says it is exploring flexible, remote work models to attract a diverse workforce, including students and people living in remote areas. It says it wants to balance technology with the nuanced understanding and empathy that human agents can provide.
Klarna CEO Sebastian Siemiatkowski told Bloomberg this week that “really investing in the quality of the human support is the way of the future for us”.
It’s quite the about-turn. In 2023 Klarna began a hiring freeze with Siemiakowski saying he wanted to be OpenAI’s “favourite guinea pig”. By 2024 it claimed to have cut its workforce from 5,000 to 3,800 staff by shifting to an AI-first policy. It said its AI chatbots were handling two-thirds of customer service conversations within their first month of deployment and claimed AI was replacing 700 customer service agents. After a decrease in service quality and an increase in customer dissatisfaction, Klarna is rowing back from this approach. “As cost unfortunately seems to have been a too-predominant evaluation factor when organising this, what you end up having is lower quality,” Siemiatkowski said.
While businesses continue to invest heavily in AI in the hope of transforming their operations and cutting costs, many AI initiatives are not delivering on this promise. An IBM study of 2,000 CEOs published earlier this month found that only 25% of AI initiatives have delivered expected ROI over the last few years, and only 16% have scaled enterprise wide. The study also indicates that businesses may be struggling to cultivate an effective data environment, with 50% of CEOs acknowledging that the pace of recent investments has left their organisation with disconnected, piecemeal technology.
Some businesses are taking bold steps. Vaccine maker Moderna for example this week announced it has merged its technology and human resources into a single function, with its newly appointed people and digital technology officer Tracey Franklin telling the Wall Street Journal that she will be redesigning teams across who take the company “based on what work is best done by people versus what can be automated with technology”. It remains to be seen whether Duolingo, which announced in April it will be phasing out contractor roles and integrating AI into hiring and performance evaluations, will moderate its AI-first stance on AI after a huge backlash on social media.
Elsewhere, Klarna has also decided to postpone its IPO in the US to late 2025, citing market volatility after the introduction of trade tariffs by the US government.
