AI-first Businesses Ease Up on AI Adoption

Companies attempting to get a head start by jumping headlong into AI are running into problems. And at least one of them is easing up on its aggressive AI adoption strategies, according to various reports.

In December, buy-now-pay-later company Klarna announced that it had paused all hiring a year ago and that its investments in AI capabilities are seeing AI do the work of 700 customer service agents. This has brought the company’s headcount down by 22% to 3,500 employees – mainly by attrition.

No longer the right fit

It now says the strategy isn’t the right fit anymore, and that putting cost as the predominant evaluation factor will result in businesses ending up with lower quality. It has now returned to hiring remote workers “in an Uber type of setup.”

"From a brand perspective, a company perspective, I just think it's so critical that you are clear to your customer that there will always be a human if you want," Klarna CEO Sebastian Siemiatkowski told Bloomberg in a report on Bloomberg last week.

To be clear, Siemiatkowski intends to make his workforce even leaner through further attrition, taking it down to about 2,500 from the current level of 3,000. And plans might yet change as the firm’s technology improves.

Separately, Duolingo last month announced an AI-first shift. It said it would stop using contractors to do work that AI can handle, and had an effective freeze on headcount increases until teams have maximized the use of automation.

Duolingo has faced substantial blowback on social media since its announcement. However, the company claims it was misunderstood. The intention, it says, is that AI will be guided by its team of learning design experts and that AI will be used with human oversight. The stock market likes it though – and its stock is at an all-time high, says Fast Company.

Cost savings

Overall, companies remain excited about the cost savings that AI could bring. And while it isn’t often said out loud, the real objective of aggressive AI deployments is really to cut costs by reducing headcount.

Last month, the World Economic Forum (WEF), in its “Future of Jobs Report 2025,” found that 40% of employers expect to reduce their workforce by automating tasks in areas that AI can handle.

The AI race promised speed and savings. But as some firms are learning, cut too deep and you risk dulling your edge. And like it or not, that edge is being sharpened at the cost of real jobs.

Image credit: iStock/Nuthawut Somsuk