AI-led cuts result in performance issues
Over the past two years, Klarna partnered with OpenAI to reduce its workforce and automate several functions. By 2023, the company had paused hiring and shifted most of its customer service work to AI. This move led to significant cost savings, including $10 million on marketing, as AI handled tasks such as translation, art production, and data analysis.
Despite this shift, CEO Sebastian Siemiatkowski has acknowledged that the quality of work done by AI agents did not meet expectations. “From a brand perspective, a company perspective, I just think it’s so critical that you are clear to your customer that there will be always a human if you want,” said Siemiatkowski. He added, “Cost unfortunately seems to have been a too predominant evaluation factor when organising this, what you end up having is lower quality.”
Company sees a decline in workforce
Klarna’s IPO prospectus filed in March shows a notable reduction in staff. The company had 5,527 full-time employees at the end of December 2022, which dropped to 3,422 by December 2024. Klarna claimed AI was doing the work of 700 customer service agents. Even as recently as December 2024, Siemiatkowski said, “AI can already do all the jobs that we, as humans do.”
Other companies follow similar path
Klarna’s use of AI to cut jobs reflects a larger trend in the technology and finance industries. Earlier this month, cybersecurity firm CrowdStrike announced it would cut five percent of its workforce, replacing roles with AI. Duolingo, a language-learning app, has also begun reducing its reliance on contractors, stating that AI will take over some tasks. The company said it had taken a similar approach in 2012 when it focused on mobile platforms. It plans to automate performance reviews and limit headcount growth to teams that cannot further automate their operations.
Microsoft lays off 6,000 as AI push deepens
Microsoft has laid off about 6,000 employees, nearly 3% of its global workforce, in one of its biggest job cuts to date. The decision comes as the company expands its use of artificial intelligence across its products and services.
Among those impacted was Gabriela de Queiroz, Director of Artificial Intelligence for Microsoft for Startups. In a social media post, she wrote, “I was impacted by Microsoft’s latest round of layoffs. Am I sad? Absolutely. I’m heartbroken to see so many talented people I’ve had the honor of working with being let go.”
According to a Bloomberg report, over 40% of the roles cut in Washington state were from software engineering teams. The layoffs affected staff at different levels and across global locations, as Microsoft reorganised to reduce management layers.
Despite being told to stop working immediately, de Queiroz said she stayed a little longer to attend meetings and say her goodbyes. “That felt right to me,” she noted in her post.
The company’s strategy shift has raised questions, as the layoffs include roles in AI even as Microsoft pushes for wider adoption of the same technology. De Queiroz added, “To those also affected—you’re not alone. We are at least 6,000.”