Swedish fintech giant Klarna is making a notable U-turn in its strategy by reintroducing human workers after an aggressive push toward AI-driven operations. Known for its “buy now, pay later” services, Klarna began its shift in 2022 by laying off around 700 employees and embracing artificial intelligence, primarily through a partnership with OpenAI.
By 2023, the company halted human hiring entirely and relied heavily on AI for tasks such as translation, data analysis, and customer service, claiming its AI systems matched the productivity of the 700 laid-off workers.
Klarna Reconsiders AI Strategy Amid Service Quality Concerns and Industry Pushback
However, by late 2024, cracks began to appear in the model. CEO Sebastian Siemiatkowski, once a vocal advocate of AI replacing human labour, admitted the company had prioritized cost-cutting at the expense of service quality. He acknowledged that a human touch remains essential for customer trust and brand perception. Klarna is now launching a hiring drive, particularly for customer service roles, offering remote work opportunities for students and rural residents. The new employment model will follow a gig-like format, allowing workers to log in on-demand.
This reversal reflects a broader industry trend, as other companies face backlash and operational issues from overreliance on AI. Duolingo, for example, phased out contractor roles for AI, and CrowdStrike shifted 5% of its workforce to AI systems. However, many firms are now reassessing such strategies. A 2024 survey of 1,400 executives revealed widespread dissatisfaction with AI implementation due to lack of talent and underperformance. In the UK, 55% of leaders who replaced human workers with AI expressed regret.
Approximatel;y $40 billion loss was faced by them, partly due to AI replacing humans,
Klarna Acknowledges Limits of AI, Reaffirms Need for Human Expertise
Klarna’s initial AI strategy drew public criticism, especially for its impersonal layoff announcements and data handling. Though the company still aims to streamline operations and reduce staff numbers to around 2,500, it now recognizes that AI cannot fully replace human roles. The shift underscores the enduring value of human expertise in maintaining service standards and brand loyalty.
Summary:
Klarna is reversing its AI-first approach after service quality dropped and backlash mounted. Having replaced 700 staff with AI, the company now plans to rehire, especially for customer service. This mirrors a broader industry trend recognizing AI’s limits and the continued importance of human roles in ensuring service quality and brand trust.
