When AI-powered chatbots appeared to be powerful enough, Klarna, the buy-now-pay-later service, went all in, pledging to replace much of its human workforce with robotic alternatives. However, after encountering the limitations of AI, it is now aggressively hiring.

Company CEO Sebastian Siemiatkowski recently announced that the company intends to ensure customers can always choose to speak with a human when they need service. Of course, the way it's doing this raises its own concerns—claiming it will build a new human customer service team that is fully remote and uses an "Uber-type setup," which seems to rely on contract work, reportedly tapping into a pool of student and rural workers. But if the best we can do is exploitative work or complete unemployment, I suppose the former at least represents the lesser of two evils.

"From a brand perspective, from a company standpoint... I just think it's very important for customers to know that there will always be someone available if they prefer," Siemiatkowski said.

This marks a stark contrast from the company’s position two years ago. Back in 2023, Siemiatkowski was essentially all-in on AI, saying he wanted his company to be OpenAI's "favorite guinea pig." The company froze hiring and set out to replace as many employees as possible with AI. By 2024, the CEO boasted about cutting the company’s workforce by nearly half, reducing headcount from 3,800 to 2,000 by shifting to AI alternatives. He referred to the layoffs as "natural attrition" rather than the result of direct cuts.

Klarna claims that AI chatbots handled two-thirds of customer service conversations in their first month of deployment and continues to assert that AI is doing the work of 700 customer service agents. The issue is that it's performing the roles of 700 very poor agents, and this quality came at a cost. "Unfortunately, in organizing this work, cost seemed to be too dominant a factor, so you end up with lower quality," Siemiatkowski said. "Genuinely investing in the quality of human support is where we're headed in the future."

One response to this might be: so what? People dislike talking to chatbots, no matter how advanced they've become in recent years. A study conducted last year found that more than four out of five people would choose to wait to speak to a human rather than be served immediately by a robot. A survey by Gartner found that about two-thirds of customers prefer companies not to use AI for customer service, and research shows that people have lower trust and satisfaction with AI agents.

Frankly, this is something Klarna knew two years ago when it opted for the AI path, as it had humans fulfilling these exact roles. The company seems to have chosen to create a worse experience for its customers because it wanted to appear forward-thinking and innovative and save money—until this worse experience proved to be more expensive than paying humans.