Can one AI assistant complete the tasks of 700 workers? One big brand says so.
While nobody’s exactly sure how many layoffs can be attributed to artificial intelligence, a recent PwC study stated that 25% of global chief executive officers say AI will directly result in 5% of employees being laid off in 2024.
A separate study from Challenger, Gray & Christmas says job cuts rose by 136% in January, 2024, partly due to AI’s impact on the workplace.
“Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas, Inc. “As we step into 2024, the landscape is shaped by stabilizing prices and the anticipation of falling interest rates. It is also an election year, and companies begin to plan for potential policy changes that may impact their industries.”
“However, these layoffs are also driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,” Challenger says.
Klarna in Chest-Thumping Mode
One company laying off employees isn’t shy about touting its new AI strategy, but won’t tie its success to recent staff cuts.
That would be Swedish-based fintech giant Klarna, which issued a new report this week loaded with evidence that artificial intelligence is a game changer for the company.
It’s also rumored to be a trigger for its recent round of 700 staff layoffs. The below numbers stem directly from Klarna’s new AI assistant tool developed by Open AI.
• Klarna’s AI assistant has had 2.3 million conversations, two-thirds of Klarna’s customer service chats.
• It’s doing the equivalent work of 700 full-time agents.
• It’s on par with human agents regarding customer satisfaction scores.
• It’s more accurate in errand resolution, leading to a 25% drop in repeat inquiries.
• Customers now resolve their errands in less than 2 minutes compared to 11 minutes.
• It’s available in 23 markets, 24/7, and communicates in over 35 languages.
• It’s estimated to drive a $40 million profit improvement to Klarna in 2024.
“This AI breakthrough in customer interaction means superior experiences for our customers at better prices, more interesting challenges for our employees, and better returns for our investors, said Sebastian Siemiatkowski, co-founder and CEO of Klarna. “We are incredibly excited about this launch, but it also underscores the profound impact on society that AI will have.”
Klarna recently told Fast Company the “equivalent work of 700 full-time agents” comments had little to do with its 2022 job cuts of 10% of its workforce – or 700 employees.
“This is in no way connected to the workforce reductions in May 2022, and making that conclusion would be incorrect,” the Klarna statement read. “We chose to share the figure of 700 to indicate the more long-term consequences of AI technology, where we believe it is important to be transparent to create an understanding in society. We think [it’s] important to proactively address these issues and encourage a thoughtful discussion around how society can meet and navigate this transformation.”
While Klarna makes an interesting case for its AI chest-thumping having no impact on staff cuts, 700 recently laid-off company employees might look at the new report and believe otherwise.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
