Tech company CEO says he stopped hiring employees a year ago as AI can fill gaps

Sebastian Siemiatkowski, CEO of the popular “buy now, pay later” service Klarna, has stirred debate with a bold claim: artificial intelligence (AI) can now perform nearly all tasks traditionally done by human employees. Speaking to Bloomberg TV, he explained how AI’s rapid progress is changing how businesses operate, raising questions about the future of jobs in a world where automation takes the lead.

Klarna has adopted a unique approach to reducing its workforce without layoffs. The company stopped hiring new employees a year ago, resulting in a gradual shrinkage of its team. Employee numbers have dropped from 4,500 to 3,500, largely due to an annual attrition rate of 20 per cent, a trend common in tech firms. Siemiatkowski explained that instead of replacing departing employees, Klarna is using AI and automation to fill the gaps.

“We have a natural attrition like every tech company. People stay for about five years, so 20 per cent leave every year. By not hiring, we are simply shrinking,” he said.

Higher pay for remaining employees

While Klarna’s workforce gets smaller, the company isn’t cutting corners on salaries. Siemiatkowski suggested that savings from reduced staffing could allow for higher pay for those still on the payroll. Although Klarna’s website still lists a few job openings, these are limited to essential roles, particularly in engineering, reflecting a shift in hiring priorities across the tech industry.

Klarna isn’t alone in betting big on automation. IBM’s CEO, Arvind Krishna, recently said that AI could replace certain jobs within five years, especially in departments like Human Resources. This trend signals a broader shift, with companies across industries exploring how AI can streamline operations and reshape their workforces.

Many tech companies including giants like Google, Amazon, Meta and others have also reduced their workforce significantly in the past years. Most of the big tech companies did not specifically mention AI as the reason behind the shrinkage but the general trend shows how AI is increasing productivity of remaining employees without an increase in headcount.