IT Layoffs News: Elon Musk's AI Startup Fired 500 Workers - Check Reason

IT Layoffs News: Elon Musk’s artificial intelligence startup xAI laid off at least 500 workers from its data annotation team on Friday night, according to multiple employees and internal messages reviewed by Business Insider.

The company sent emails to affected staff explaining that the decision was part of a strategic shift away from “generalist AI tutors” toward “specialist AI tutors.”

“After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritisation of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately,” the company wrote in its email.

Workers were told they would continue to be paid through the end of their contracts or until November 30, but their access to company systems was cut off the same day they were notified, Business Insider reported.

Largest Team At xAI Impacted

The data annotation team is the largest within xAI and plays a crucial role in training Grok, the company’s AI chatbot, by labelling and contextualising data. On Friday afternoon, the main Slack room for data annotators had more than 1,500 members, but by Friday evening, that number had dropped to just over 1,000 and continued to decline as layoffs were rolled out.

Despite the layoffs, xAI posted on X Friday night that it plans to grow its team of specialist AI tutors by “10X.”

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Senior Staff Departures Preceded Layoffs

The cuts came just days after several senior-level employees, including the team’s former head, had their Slack accounts deactivated. According to Business Insider, in the days leading up to the layoffs, employees were called into one-on-one meetings to review their projects and asked to highlight colleagues for their hard work.

On Thursday, workers were warned to prepare for a reorganisation. A team-wide announcement instructed them to complete a series of tests by Friday morning to help determine their future roles.

The tests covered traditional areas like STEM, coding, finance, and medicine, as well as more unusual specialities such as Grok’s “personality and model behaviour” and “shitposters and doomscrollers.”

New Leader Oversees Transition

The message was posted by Diego Pasini, who recently became the team’s leader. Pasini, according to his LinkedIn profile, joined xAI in January and is currently on leave from the Wharton School of Business.

While some employees responded positively to the announcement, others expressed frustration at the short notice. One worker who criticised the timing of the tests on Slack reportedly had their account deactivated shortly afterward, Business Insider said.