Klarna to cut 10% of workforce as BNPL sector faces economic setbacks

Klarna to cut 10% of workforce as BNPL sector faces economic setbacks

by Pranali Mehta

Swedish fintech firm, Klarna, is reportedly planning to lay off around 10% of the total workforce, becoming the latest buy now, pay later tech firm to announce layoffs as investors turn sour on the sector.

In a pre-recorded message, Klarna co-founder and CEO, Sebastian Siemiatkowski, broke the news to his employees. The message had Siemiatkowski claiming that the majority of the company’s employees will not be affected by the cuts, however, few will be informed of being let go.

Siemiatkowski added that when the company outlined its business plans for 2022 last year in autumn, the world was a fundamentally different place than today. Since then, the world has seen the unfolding of an unnecessary and tragic Ukraine war, a sharp rise in inflation, a shift in consumer sentiment, and a highly volatile stock market, along with a potential recession.

the CEO stated that the European staff will be provided with redundancy packages and associated compensation. Meanwhile, for workers based out of Europe, things may look different based on the place they work from.

Further information regarding the changes will soon be shared with the employees. Currently, the firm has over 6,500 employees worldwide.

Buy now, pay later services had become quite popular during the pandemic as shoppers could pay for their products in interest-free installments later. However, investors are now getting worried about the sector’s growth sustainability as consumers are being mindful of their finances due to increasing inflation and high borrowing costs.

The news of the layoff comes amidst media reports that the firm is set to lose one-third of its total value in a new round of funding. Klarna’s most recent valuation stood at $46 billion as part of an investment that was led by SoftBank.

Siemiatkowski stated that Klarna’s decision of cutting down the workforce was one of the hardest undertaken since its establishment. However, it was a necessary step to stay focused on what will lead to its success in the future. 

Recently, a number of prominent tech firms have also announced similar measures to cope with the economic blows, with Meta and Uber putting a pause on hiring while Robinhood and Netflix announcing layoffs.

Source credit: https://www.cnbc.com/2022/05/23/klarna-to-lay-off-10percent-of-its-workforce-.html

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...