WEB DESK: Elon Musk’s artificial intelligence start-up xAI has laid off at least 500 workers from its data annotation team in a dramatic overnight shake-up, marking one of the company’s biggest workforce cuts to date.
The layoffs, which took place on Friday night, were confirmed through internal emails seen by Business Insider. Staff were informed that xAI was scaling back its team of generalist AI tutors and pivoting towards building a larger group of specialist AI tutors.
In the email to employees, the company said it had “decided to accelerate the expansion and prioritisation of our specialist AI tutors, while scaling back our focus on general AI tutor roles.”
It added that this new approach would take effect immediately. “As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude,” the message read.
Affected workers were told they would be paid through either the end of their contract or until November 30, though their access to company systems was cut off as soon as the layoff notice was delivered.
Key team behind Grok faces major cuts
The data annotation team has been xAI’s largest workforce group. Its members train Grok, the company’s flagship chatbot, by sorting and labelling huge volumes of raw data to help it better understand the world.
Only hours before the layoff wave began, the team’s main Slack channel had over 1,500 members. By Friday evening, screenshots showed that number had already dropped to around 1,000, with more departures unfolding during the night.
Ironically, as news of the layoffs spread internally, xAI’s official account on X announced that it planned to grow its team of specialist AI tutors “by 10X” and was actively hiring for those positions.
Sudden tests, quiet exits and mounting tension
The move followed days of internal turbulence. Earlier this week, several senior figures, including the data team’s former head, had their Slack accounts quietly deactivated. In the days after, workers were called into one-on-one meetings to review their roles and achievements, and were even asked to name colleagues they believed were doing outstanding work.
On Thursday night, staff were told to prepare for a sweeping reorganisation. In a team-wide message, workers were asked to drop their ongoing tasks and complete a series of tests by Friday morning to determine where they might fit within the company’s future structure.
The tests, shared by new team leader Diego Pasini, covered subjects such as STEM, coding, finance, medicine, and even Grok’s “personality and model behaviour.” Others focused on content safety, audio and video data, and “red teaming” the chatbot to identify weaknesses.
Pasini, who joined xAI in January and is currently on leave from the Wharton School of Business, did not respond to requests for comment.
According to screenshots viewed by Business Insider, more than 200 workers reacted to Pasini’s announcement with a green check-mark emoji, though over 100 posted follow-up questions and concerns. One frustrated employee remarked, “Doing this after people have gone home for the day is pretty shady.” Their Slack account was reportedly deactivated shortly after.
Massive shake-up for xAI’s largest workforce
xAI has not said exactly how many workers were laid off, but the cuts appear to have impacted a large portion of its data annotation team. The sudden pivot signals a major reshaping of how xAI wants to develop Grok, shifting from a broad pool of generalist workers to smaller groups of experts in specific fields.
As xAI bets big on specialist tutors to sharpen Grok’s capabilities, hundreds of its former workers are now left reeling from a swift and unanticipated end to their roles.