AI replaces humans: Klarna replaces 700 employees with AI, slashes workforce by 40%

Klarna isn’t easing into the AI era—it’s sprinting into it with fewer humans on board. Klarna CEO Sebastian Siemiatkowski revealed on Wednesday that the company has cut its workforce by roughly 40%, driven by AI adoption and natural attrition.

The Swedish fintech giant said it shrank its workforce from roughly 5,500 employees to just over 3,400, a cut of around 40%. CEO Sebastian Siemiatkowski didn’t sugarcoat it during an interview with CNBC:

“The truth is, the company has shrunk from about 5,000 to now almost 3,000 employees. If you go to LinkedIn and look at the jobs, you’ll see how we’re shrinking.”

Klarna Replaces 700 Workers With AI as  Company Cuts Workforce by 40%

That drop didn’t happen overnight. Klarna has aggressively rolled out AI tools across its operations, and the results are already showing. The company partnered with OpenAI in 2023, and a year later, launched an AI customer service assistant that’s reportedly doing the work of 700 former human agents. “Klarna CEO says AI helped company shrink workforce by 40%,” CNBC reported.

To drive the point home, Klarna even used an AI-generated version of Siemiatkowski to present its Q3 earnings last year—a visual reminder of how many roles can now be automated.

AI Replacing Humans

Klarna says AI is now handling the work of 700 customer service agents. The message? Pack up.

Klarna isn’t alone. Just last month, the internet was abuzz after Shopify CEO Tobi Lütke confirmed on social media that a leaked internal memo stating the company must ‘hire an AI before you hire a human‘ was real.

While AI took the spotlight, the company also leaned into natural attrition. Klarna stopped hiring in 2023 and instead let its workforce shrink as people left. “We have simply communicated to our employees that what we’re going to do is we’re gonna shrink, so we’re going to stop hiring,” Siemiatkowski said. “Natural attrition in a company like ours is 15-20% per year, so we shrink naturally 15-20% by people just leaving.”

That hiring freeze wasn’t exactly consistent, though. TechCrunch previously reported that Klarna continued to post new openings even after the freeze was announced. As of now, there are still about 10 open roles, mostly in Europe.

Klarna says this isn’t just about AI replacing humans. But the company has been unusually vocal about the productivity gains it’s seeing. It’s one of the few tech firms being upfront about what widespread AI adoption might look like inside a company—and it’s not subtle.

Is this just the beginning? In March, Microsoft co-founder Bill Gates also warned that AI could replace most human jobs, including doctors and teachers, within the next decade.

Still, it’s not a full AI takeover just yet. Siemiatkowski told Bloomberg last week that Klarna is looking to bring in more human customer service reps again—this time in an “Uber-type of setup.” He admitted the AI-only model led to a drop in quality.

Meanwhile, Klarna’s IPO plans are in limbo. After filing its prospectus in March, Klarna put its offering on hold amid market jitters triggered by former President Trump’s tariff announcement in April. Other companies, like StubHub and eToro, hit pause, too. But with IPO activity picking back up—eToro just debuted, and Chime and Hinge Health are on deck—Klarna may return to the table soon.

No timeline yet, though. For now, the company is leaning harder into AI—and lighter on humans.