Klarna is hiring humans again as AI replacements offer “lower quality” output

Facepalm: As companies fall over each other replacing real employees with AI that doesn’t require monthly wages, sick pay, maternity leave, etc., some are encountering a problem: AI performs a lot of jobs at a much lower quality than humans. AI-first firm Klarna has discovered this, and is now on a recruitment drive to add more flesh-and-blood staff to its ranks.

Buy now, pay later/shopping service Klarna is one of the companies that have really been going all-in on AI. CEO Sebastian Siemiatkowski reached out to OpenAI boss Sam Altman in 2023, telling him “I want Klarna to be your favorite guinea pig,” and the two firms have worked together ever since.

Klarna has leaned heavily into AI since then; Siemiatkowski announced a freeze on hiring in December 2023 as it looked to pursue AI alternatives to humans. He also talked about cutting the workforce by almost half, from 3,800 to 2,000 – it had been around 5,000 in 2023 – though Siemiatkowski framed this as “natural attrition.” The CEO said those left will have to use AI to “do more with less.”

Siemiatkowski also said that AI chatbots were handling two-thirds of customer service conversations within the first month of their deployment and performing the work of 700 employees.

But more work doesn’t mean better work. Siemiatkowski revealed to Bloomberg that Klarna is once again hiring humans so customers will always have the option to speak to a real person when they require customer service.

“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,” Siemiatkowski said.

Siemiatkowski added that although AI customer service chatbots were cheaper to employ than human staff, they offered a “lower quality” output.

“As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality,” Siemiatkowski said. “Really investing in the quality of the human support is the way of the future for us.”

Siemiatkowski said all new human customer service representatives will be remote-based in an “Uber type of setup.” The company is targeting students, rural populations, and dedicated Klarna users for the roles.

As Siemiatkowski notes, it’s not just the poor quality of the AIs’ work that has prompted Klarna’s hiring spree. Some people refuse to use a company’s services if they can only talk to a machine rather than a real person when help is needed. It’s a lesson other firms that are also going all-in on AI may soon learn.

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