Klarna tried replacing people with AI. Here's why they're hiring humans again

In 2022, fintech giant Klarna made a headline-grabbing move: cutting 700 roles, mostly in customer service, and replacing them with AI.

Fast forward to 2025, and Klarna CEO, Sebastian Siemiatkowski, is making headlines again, this time for hiring people back.

The reason? Quality dropped and customers noticed and it became clear that AI alone couldn't deliver the level of service people expect from a trusted brand.

This isn't just a Klarna problem. It's a message to every leader racing to automate.

AI can be fast. But faster isn't always better

For some, the appeal of AI is strong. It doesn't take breaks. It doesn't need sick leave. It can handle 100 chats at once.

But what AI still can't do well? Know when a human touch is needed.

Klarna's CEO admitted that their drive to cut costs by automating customer service was a misstep. In his own words, the move "led to lower quality" and has forced the company to rethink.

Now they're piloting a new model, hiring remote workers for flexible customer service roles. It's a partial return to people, with a new setup. But the underlying message is clear: AI doesn't replace the value of people.

If you're leading people through AI changes, take note

As leaders we need to take notice. Not because you shouldn't use AI, but because it's a reminder that how you use it matters.

Here's how to lead with intention, not just automation:

• Start with service, not savings. Before rolling out a shiny new AI system, ask: Will this improve the experience for customers and staff? If the only benefit is cost-cutting, you're probably cutting more than you think, like trust, loyalty, and long term value.

• Keep the humans in the loop. There's a difference between replacing a role and reshaping it. Some tasks can be automated. But the person in that role likely holds contextual knowledge, customer insight, and soft skills that AI simply can't replicate. Build on that. Don't bin it.

• Balance the short term with the long view. Quick savings from automation might look good on a quarterly report but if customers leave, morale drops, and trust erodes, you're building a business on shaky ground. Sustainable success needs people and tech working together.

• Upskill, don't sideline. If AI is changing how a role works, give your people the chance to evolve with it. Teach them how to use the tools, explain what's changing, and invite them to shape the new workflow. That's how you create buy-in, not burnout.

What it means for leadership

Klarna's decision to hire people back isn't just a reversal. It's a reminder that humans are still essential, especially in moments that require empathy, trust, and judgement.

It's also a call to rethink how we define value.

Just because a task can be automated doesn't mean it should. And just because a person's role is "replaceable" doesn't mean their contribution is.

Great leadership isn't about replacing people with tech. It's about using tech to amplify what people do best.

At Paadia Technology, we help leaders and teams get this right

We work with organisations who are bringing AI into their workplace and want to do it well, not just fast.

Through workshops, training and strategy support, we help teams build practical AI capability, while keeping people at the centre. We believe that AI can unlock incredible potential but only when it's guided by human intention.

If you're a leader navigating AI changes, we'd love to help you do it thoughtfully and with your people in mind.