Klarna is redeploying workers to customer-support roles after its CEO acknowledged that earlier AI-driven cost-cutting went too far.
A number of employees of the buy-now, pay-later firm, including engineers and marketing people, are being told their jobs are no longer needed. Instead, they are being redirected into customer support positions via an internal talent pool, according to three current employees who spoke on condition of anonymity since they were not authorized to speak publicly.
Klarna, which on Tuesday unveiled plans to go public, has previously talked up its AI plans. It has eliminated over 1,200 external SaaS tools, restructured teams, and placed 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. AI can help companies trim costs and streamline operations, but overreliance on the technology can lead to unintended consequences.
A spokesperson for Klarna declined to comment.
While many companies, including Amazon, have said they will shrink their workforces because of AI, others are finding that AI has its limitations, particularly in customer service roles. The use of AI chatbots in customer service can sometimes lead to inaccurate information, or so-called “botshit.”
McDonald’s removed its Automated Order Taker technology from over 100 restaurants last year after a series of mishaps with the tech went viral. Starbucks has said it is doubling down on baristas, not AI, to improve its customer experience.
“We just had an epiphany: in a world of AI nothing will be as valuable as humans,” Klarna CEO Sebastian Siemiatkowski said earlier this year. He added that the company would start working toward being “the best at offering a human to speak to.”
Klarna plans to raise $1.27 billion in an IPO, according to an SEC filing on Tuesday. The company had planned to go public earlier this year but pulled back in April amid market uncertainty around President Donald Trump’s tariff announcements.
Employees across several areas of Klarna — 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 number of employees placed in the talent pool and later reassigned to customer support roles is unclear.
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, Siemiatkowski said in an X post that “AI allows us to be fewer in total.”
In an interview with Bloomberg in May, Siemiatkowski said his cost-cutting push had gone too far and that he was testing out a gig work model to hire customer service agents.
“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.”
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