The challenge for high-flying tech unicorns is how to keep growing in a belt-tightening environment, due to inflation and uncertain economic conditions. It’s even harder when the tech darlings don’t generate sufficient profits to maintain their market capitalization. The likelihood of investors continually funding companies amid high interest rates and economic headwinds dwindles, as there is too much risk.
When tech layoffs started taking off in mid-2022, Klarna, a Sweden-based fintech company in the buy-now-pay-later space, announced plans to lay off about 10% of its global workforce.
Fast-forward to the ascension of artificial intelligence and a tech push to make companies leaner and more efficient, Klarna implemented an AI assistant that is now handling the workload equivalent to 700 full-time staff members, according to a recent statement by the company.
How The AI Works
Klarna partnered with OpenAI to improve customer service interactions. In just one month, the ChatGPT-inspired bot is managing two-thirds of customer service chats—2.3 million conversations—in 23 markets and 35 languages.
The integration is expected to increase profits by $40 million in 2024, the company stated. The chatbot’s efficiency has resulted in fewer errors, a 25% decrease in repeat inquiries and reduced average conversation times from 11 to 2 minutes.
“This AI breakthrough in customer interaction means superior experiences for our customers at better prices, more interesting challenges for our employees, and better returns for our investors,” said Sebastian Siemiatkowski, cofounder and CEO of Klarna.
The company’s focus on AI technology aligns with its goal of becoming more agile and competitive in the market. The BNPL firm is considering an IPO earlier than expected, seeking a valuation of $20 billion and potentially listing in the third quarter of 2024, Bloomberg reported.
AI Over People?
The adoption of AI at Klarna has significantly impacted its hiring strategy. The company experienced a 25% reduction in headcount by the end of 2023, Fortune reported.
A company spokesperson told the publication that Klarna’s adoption of AI did not directly explain last year’s drop in headcount, but is now an integral consideration in its recruitment strategy.
“We are in the fortunate position of being a growing company so for Klarna, AI enables us to grow more quickly without adding headcount as quickly as we would have done previously,” the Klarna representative said.
Last year, the company instituted a hiring freeze for roles other than engineering. At the time, Siemiatkowski told the Telegraph, “Things that previously took people a lot of time can be done much faster and much shorter, and we need fewer people to do the same thing. The right thing for us is just to say: ‘let’s not recruit now, let’s see how this plays out.’”
While Klarna’s AI assistant handles a significant portion of customer inquiries, there will still be a need for human agents to review logs, ensure bot accuracy and handle more complex or sensitive cases that require personalized assistance. Workers may transition into specialized roles that complement the chatbot’s functions.
Source: Forbes
