Fired 700 People and Replaced Them with AI-Now Hiring Them Back

A few years ago, Klarna, the Swedish fintech company best known for its “buy now, pay later” services, made a big and risky move. In 2022, the company laid off around 700 employees, about 10% of their team and decided to replace much of that work with artificial intelligence (AI).

It sounded like a futuristic upgrade. Klarna said their new AI systems were super fast, super smart, and could do the work of hundreds of people, especially in areas like customer service, translation, and marketing. The CEO even said the AI was handling more than two-thirds of all customer chats.

But now, in 2025, things have taken a surprising turn, Klarna is bringing people back and the company’s leadership admits that going all-in on AI might not have been the smartest idea after all.

Why Klarna Fired So Many People

Back in 2022, Klarna was trying to cut costs. Like many tech companies at the time, they were feeling the pressure of rising expenses and uncertain markets. So, they made a bold decision to automate as much as possible.

The idea was to use AI to handle tasks that humans were doing before. This included replying to customer support queries, writing promotional emails, translating content, and more. It sounded efficient, and Klarna was proud to show off how quickly their new AI systems could respond.

At first, it looked like it was working. Klarna said their AI could respond to customers in less than 2 minutes compared to 11 minutes before and they believed this was the future of work.

But speed isn’t everything.

Customers started complaining. A lot. Many said the chatbot responses felt robotic, unhelpful, or just wrong. People had a hard time getting real answers to slightly complicated or emotional problems, things that AI still struggles with.

And it wasn’t just customers who were unhappy. Employees who stayed behind said the new system made things confusing and less personal. Morale dropped. Even Klarna’s reputation started to take a hit.

Eventually, Klarna’s own CEO, Sebastian Siemiatkowski, admitted they had focused too much on saving money and not enough on quality. He said:

“Cost unfortunately seems to have been a too predominant evaluation factor… what you end up having is lower quality.”

Now They’re Rehiring Humans

Over the past year, Klarna has started quietly rehiring for many of the same roles it once cut. This time, they’re not ditching AI, but they are changing how they use it.

Instead of replacing humans completely, Klarna is now going for a human + AI combo. For example, AI might write the first version of a customer support message, but a real person checks and edits it. Or AI helps with routine stuff, while humans take care of the more emotional, tricky, or creative work.

Also, many of the new hires are on flexible or remote contracts, meaning Klarna is trying to stay efficient, but not at the cost of quality service.