xAI Restructures: 500 Data Annotators Laid Off as Company Shifts Focus

xAI reportedly lays off 500 workers from data annotation team | TechCrunch

Elon Musk's AI startup xAI laid off 500 team members on Friday night, according to internal messages viewed by Business Insider. These emails reportedly announce an immediate "strategic pivot," with the company deciding to "accelerate the expansion and prioritization of our specialist AI tutors, while scaling back our focus on general AI tutor roles." "As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude," xAI reportedly wrote. According to Business Insider, these cuts represent about one-third of xAI's 1,500-person data annotation team -- the team that works to label and prepare data used to train xAI's chatbot Grok. When contacted for confirmation, xAI pointed to a statement on X (the Musk-owned social network that it acquired earlier this year) declaring that the company "will immediately surge our Specialist AI tutor team by 10x." "We are hiring across domains like STEM, finance, medicine, safety, and many more," the company said.

Musk's xAI lays off hundreds of data annotators, Business Insider reports

Sept 12 (Reuters) - Elon Musk's xAI laid off at least 500 workers from its data annotation team, Business Insider reported on Friday. The company sent out emails Friday night notifying employees that it was planning to downsize its team of generalist AI tutors, the report said citing multiple messages viewed by Business Insider. Reuters could not immediately verify the report. Reporting by Preetika Parashuraman in Bengaluru; Editing by Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab

xAI reportedly laid off at least 500 AI tutors working on Grok

xAI has laid off at least 500 workers from its data annotation team, the company's largest, according to Business Insider. The annotation team is in charge of categorizing and contextualizing raw data used to train Grok so that it can understand the world better. Business Insider says the laid off employees were informed via email on the evening of September 12, Friday, that it was going to downsize its team of general AI tutors. They were reportedly told that they would be paid their salaries until the end of their contracts on November 30, but their access to xAI's systems had been cut off after they received the notice. When Reuters asked the company for a comment, it referred to a post on X wherein it posted a call for specialist AI tutors instead. xAI said that it will "immediately surge [its] Specialist AI tutor team by 10x" and that it's hiring across STEM fields. As specialist tutors, the new hires will be "enhancing [the company's] AI technologies through high-quality inputs, labels and annotations using specialized software." They'll gather data and provide their own, not only in text format, but also through audio recordings and video sessions. As Reuters has noted, the layoffs come after several high-profile departures from xAI, including the company's chief financial officer Mike Liberatore. The company launched Grok 4 in July, calling it the "smartest AI in the world." Elon Musk claimed during the model's reveal that if you make Grok 4 take the SATs and the GREs, it would get near perfect results every time and can answer questions it's never seen before. He also proclaimed that Grok is going to invent new tech maybe later this year, and that he would be shocked if it doesn't happen next year.

Elon Musk's xAI lays off 500 in overnight restructuring of Grok training workforce

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. Cutting corners: Elon Musk's company xAI has shed a large share of its data-annotation workforce amid a sharp reorganization of its training operations. At least 500 employees on the company's annotation team, which is responsible for training xAI's chatbot Grok, lost their jobs in the restructuring. Business Insider obtained an internal email informing workers that the firm plans to prioritize "specialist AI tutors" over generalist roles and will immediately eliminate most general tutoring positions. The company told employees that it would honor their contracts through either November 30 or their previously agreed-upon end dates, but it revoked their system access the same day. The layoffs encompass roughly 500 workers. The decision marks a significant change in direction for xAI's largest team, which at its peak had more than 1,500 annotators. These employees are crucial to developing Grok, as they provide structured training data that enables the chatbot to interpret and respond to information effectively. By Friday evening, the main Slack channel for annotators had shrunk to just over 1,000 members and continued falling throughout the day. An xAI spokesperson pointed to a post on X saying the company plans to expand its specialist tutor team tenfold and is actively hiring. Specialist tutors focus on fields such as STEM, coding, finance, law, and media, while generalists previously handled tasks across text, audio, and video. The layoffs capped a turbulent week in the data annotation unit. Several senior managers, including the former team head, had their Slack accounts deactivated, and in the following days, employees were called into one-on-one meetings to review their projects and performance. By Thursday evening, managers informed staff of a forthcoming reorganization and instructed them to complete a series of tests by Friday morning to help determine their future roles. The assessments covered traditional subjects like science, finance, and programming, as well as unconventional categories related to Grok's safety, personality, and internet culture behavior. Additional tests focused on red-teaming the chatbot and managing multimedia content. More than 200 employees confirmed the testing message with a check-mark emoji, while others raised concerns about the short turnaround. "Doing this after people have gone home for the day is pretty shady," one worker wrote in Slack before xAI deactivated their account. Oversight of the annotation group recently shifted to Diego Pasini, who joined xAI in January. Pasini directed workers to complete at least one assessment by Friday morning. Some exams ran on the skills-testing platform CodeSignal, while others used Google Forms for distribution. Pasini did not immediately respond to a request for comment. Neither he nor xAI has clarified how many of the laid-off workers will be replaced by new hires in specialist fields.

Elon Musk Appears to Now Be Firing the People Behind Grok

After vowing to create a "maximum truth-seeking" AI, Elon Musk appears to now be sacking the people who built it for him. Slack screenshots leaked to Business Insider show that the accounts of at least nine high-level employees with the data annotation team at xAI, Musk's OpenAI competitor, were deactivated over the weekend, in what seems like a major culling at the lab that built the social network's infamous chatbot, Grok. Those people, who weren't named by BI, previously worked on the human data management team that oversaw the 1,500 or so workers and contractors that made up xAI's "AI tutor" team, which is essentially tasked with training Grok how to be more intelligent for anywhere from $35 to $65 per hour, per the company's career page . As BI reported earlier this year, those tutors have, to their chagrin, occasionally been asked to scan their faces for AI training purposes. Sifting through LinkedIn profiles associated with the names of the employees whose profiles had been deactivated, the website identified roughly a dozen people who had worked on Grok's human data managerial team. Many of them had posted on Slack as recently as September 5, the article notes. Among those whose Slacks were deactivated was a supervisor who oversaw the rest of the managers, BI continued -- and they worked on data annotation at Tesla's Autopilot division prior to joining xAI. Along with those Slack deactivations, multiple employees told the website that workers have been individually called in for meetings with supervisors. In those one-on-ones, the workers have been asked -- much like when Musk was working in Donald Trump's presidential administration earlier this year -- what they've been working on and how they add value to xAI. Those meetings, one worker old BI, have caused a "sense of panic" among the tutors. xAI didn't respond to BI's request for comment, a common practice. Grok has been the subject of numerous scandals in recent months, including the "MechaHitler" debacle earlier this summer when the chatbot started targeting people deemed to have Jewish-sounding names, using racial slurs, and calling for a second Holocaust. Were those managers fired for letting Grok go off the rails so badly? Or is Musk scaling down for some other reason? We'll have to wait and see -- but we'll be watching.

xAI cut Grok AI's data team

Layoffs hit general AI tutor team as Elon Musk's company shifts focus to hiring specialist STEM annotators. xAI, Elon Musk's artificial intelligence company, recently reduced its data annotation workforce by at least 500 employees. This action, impacting the team responsible for refining data used to train the Grok AI model, occurred on the evening of September 12, 2024. Business Insider reported that affected employees, working as general AI tutors, were notified via email. The notification stated that while they would receive their salaries through the end of their contracts on November 30, their access to xAI systems was immediately terminated. The data annotation team plays a critical role in categorizing and contextualizing raw data, enabling Grok to better comprehend and interact with the world. Following inquiries from Reuters, xAI addressed the layoffs by referencing a post on the social media platform X. The post announced an immediate expansion of its "Specialist AI tutor team by 10x," with recruitment efforts focused on STEM (Science, Technology, Engineering, and Mathematics) fields. The announcement detailed that these specialist tutors would contribute to enhancing xAI's AI technologies through high-quality inputs, labels, and annotations, utilizing specialized software. Additionally, their work would encompass gathering data in various formats, including text, audio recordings, and video sessions, to refine training data. These changes at xAI follow the departure of key personnel, including Chief Financial Officer Mike Liberatore, sometime before September 2024. In July 2024, xAI launched Grok 4, promoted as the "smartest AI in the world." During the unveiling, Elon Musk stated Grok 4's capabilities included achieving near-perfect scores on standardized tests like the SAT and GRE, answering novel questions, and potentially inventing new technology before the end of 2024, or certainly by the following year.

Elon Musk's Startup xAI Is Laying Off 500 Employees Who Worked on Training Its Grok Chatbot: 'Strategic Pivot'

Elon Musk's startup, xAI, just cut down its biggest team by a third. The AI startup laid off at least 500 workers on its 1,500-person data annotation team on Friday night, reports Business Insider. The move means the team, which leads AI training, is down to about 1,000 workers. The group is tasked with refining xAI's chatbot, Grok, by teaching it how to contextualize data. Related: Elon Musk's Companies, X and xAI, Sue Apple and OpenAI for 'Anticompetitive Scheme' The company asked the team's employees to complete a series of tests on Thursday night that would help classify them based on their strengths and interests. The tests covered areas like coding, finance, and medicine. More than 200 employees completed the tests, which had a Friday morning deadline, per BI. On Friday night, xAI notified some employees on the team that they were being laid off via email that said the company was looking for more "specialist AI tutors," with deep knowledge of disciplines like science, technology, and finance, and cutting back its employment of "general AI tutor roles" without that specialized knowledge. Generalist AI tutors take on a range of broader tasks, like annotating videos and writing assignments. Related: Elon Musk's xAI Is Reportedly Set to Hire Thousands of 'AI Tutors' With Pay Up to $65 an Hour "This strategic pivot will take effect immediately," the email, which was obtained by BI, read. "As part of this shift in focus, we no longer need most generalist AI tutor positions, and your employment with xAI will conclude." Workers were told that they would lose access to company systems immediately, but that they would still be paid their salaries through either the end of their contract or Nov. 30. Amidst the layoffs, xAI is still hiring: The startup recently advertised for open positions for specialist AI tutors. In a post on X last week, xAI wrote that it was planning to "immediately" grow its specialist team tenfold and was "hiring across domains" like medicine and finance. xAI has been rapidly growing its data annotation team. Since February, the startup has added about 700 employees to the group. According to xAI's website, compensation for AI tutor roles can range from $45 to $100 per hour. The company had listed 13 open AI tutor positions at the time of writing. The xAI layoffs follow several senior-level departures from the startup, including the company's former Chief Financial Officer Mike Liberatore, who left at the end of July. That same month, xAI launched Grok 4, its most advanced model yet, calling it the "most intelligent model in the world" with high performance on benchmark tests.

Elon Musk's xAI Is Redefining Data Annotation -- an Unglamorous But Vital Job in A.I.

The company is betting expert annotators, not generalists, will improve how Grok learns. Data annotation may not be the most glamorous job in Silicon Valley, but it's indispensable for A.I. developers and has made companies like Scale AI multibillion-dollar ventures overnight. Training large language models requires armies of humans to label text, images and video so A.I. systems can learn from them. Now, Elon Musk's xAI is reshaping how that work is done by shifting away from general contractors and toward experts in specialized fields it calls "A.I. tutors." Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters In that vein, xAI recently laid off at least 500 generalist annotators, as reported by Business Insider. The cuts affected about one-third of the company's 1,500-person annotation team. In emails cited by the outlet, executives described a "strategic pivot" toward hiring domain experts as specialist A.I. tutors. "Specialist A.I. tutors at xAI are adding huge value," said xAI in a Sep. 12 post on X that declared the company will "immediately surge" its specialist A.I. team by tenfold. The company did not respond to requests for comment from Observer. What data annotation is and why it matters Human annotators play a crucial role in fine-tuning raw data, ensuring it can be used effectively to train models. But the work has long been fraught. Firms that outsource this work, like Scale AI, have faced lawsuits from contractors alleging wage theft, misclassification and exposure to disturbing content without safeguards. Unlike rivals that rely heavily on third parties, xAI employs a large in-house annotation team. Other A.I. leaders -- including OpenAI and Google -- have worked with Scale in the past, though both distanced themselves from the firm after Meta took a 49 percent stake and hired its CEO, Alexandr Wang, to lead its new superintelligence division. Today, many also contract with competitor Surge AI, which counts Anthropic and Microsoft among its clients. xAI itself has previously tapped third-party annotators, but is now doubling down on its own staff. The company has posted openings for more than a dozen specialist tutor roles spanning A.I. safety, data science, STEM, finance, Japanese and even "memes and headline commentary." The latter position involves improving Grok's ability to "recognize and analyze memes, trolling and virality mechanisms," according to the listing. Qualifications for these roles are steep. For STEM specialists, candidates must hold a master's or Ph.D. in a relevant field -- or have earned medals in competitions like the International Mathematical Olympiad. xAI says tutors can work part-time or full-time and earn between $45 and $100 per hour. The changes come as xAI faces wider turnover beyond its annotation team. In July, the company's head of infrastructure, Uday Ruddarraju, left for rival OpenAI. Co-founder Igor Babushkin departed the following month to launch a venture capital firm. And in September, Mike Liberatore resigned after just three months as chief financial officer.

Mass layoffs at Elon Musk's xAI: 500 data workers axed as Grok chatbot faces big changes

Elon Musk's AI startup xAI has laid off about 500 employees from its data annotation team, which is the company's largest division responsible for training its chatbot Grok. The layoffs were communicated via email on the evening of September 12, 2025, with employees losing system access immediately but being paid until the end of their contracts or November 30 at the latest. Elon Musk's xAI recently made waves with a significant workforce restructuring that is reshaping its AI development approach. On the evening of September 12, 2025, the company laid off approximately 500 employees from its largest division, the data annotation team. These workers, known as generalist AI tutors, were central to training Grok, xAI's chatbot, by labeling and contextualizing raw data necessary for teaching the AI how to understand the world. This move represents about one-third of that division, which originally had around 1,500 members. The decision came abruptly. Employees received emails late Friday, notifying them of the downsizing. They were told they would be paid through the end of their contracts or until November 30 at the latest. However, their access to company systems and communication platforms, including Slack, was cut immediately. The layoffs notably included some senior members of the human data management team, which had been instrumental in Grok's development. Typical wages for this team ranged between $35 and $65 per hour. The layoffs are part of a strategic shift at xAI to move away from generalist roles and prioritize hiring "specialist AI tutors" with domain-specific expertise in areas like STEM, coding, finance, law, and even peculiar categories such as Grok personality experts and "shitposters and doomscrollers." xAI plans to expand this specialist tutor team by ten times. This restructuring follows ongoing challenges for Grok, including controversial AI behavior and unauthorized system prompt modifications. xAI aims to enhance Grok's reliability and transparency by focusing on higher-quality inputs from specialist tutors rather than a large team of generalist annotators. Despite the layoffs, xAI insists it is not scaling down but refocusing its efforts with more skilled personnel to improve Grok's development. The core reason behind this dramatic staff reduction is a strategic pivot. xAI is shifting away from generalist roles toward hiring specialist AI tutors with niche expertise. The new hires are expected to possess deep knowledge in STEM fields, coding, finance, law, and even unconventional areas like Grok's personality and behavior analysis. Surprisingly, the company is also on the lookout for "shitposters and doomscrollers" as part of this specialist expansion. This restructuring happens amid growing challenges for Grok. The AI chatbot made headlines earlier with controversial outputs and issues related to its training system. Reports indicate that before the layoffs, employees underwent tests designed to evaluate their skills and fit for the new strategy. These tests covered a broad spectrum -- from technical STEM knowledge to Grok's personality traits and content safety protocols. The initiative was led by Diego Pasini, a new team leader currently on leave from Wharton School of Business, which has sparked questions about leadership experience within the reorganized teams. xAI's broader goal appears to be clear: building a smaller, more expert workforce to improve the quality and reliability of Grok's AI. Elon Musk founded xAI in 2023 to compete directly with tech giants such as OpenAI, Microsoft, and Google, positioning Grok as a less censored, more transparent alternative. Despite these layoffs, the company insists it is not shrinking but rather strengthening its specialization to accelerate growth and innovation. Musk has previously claimed that Grok 4, released in July, is among the smartest AIs worldwide, with near-perfect performance on advanced tests and the potential to invent new technologies this year or next. However, these internal shifts arrive alongside recent leadership instability, including the July departure of xAI's finance chief Mike Liberatore after only a few months. Such high-profile exits, combined with sudden layoffs, have fueled speculation about the company's long-term stability. For the 500 laid-off workers, the future is uncertain, but for xAI, this strategic recalibration could be a critical step in refining its competitive edge in the fast-evolving AI landscape. The strategy puts xAI on a different track from many of its rivals. Other AI companies have relied on armies of annotators to fuel their models. The belief has long been that more data means better AI. Musk's company appears to be betting on the opposite: quality over quantity. If the gamble works, Grok could stand out by producing fewer mistakes in sensitive topics. That could give xAI an advantage in industries where credibility is everything. Imagine an AI that not only chats but also offers safe medical guidance or helps professionals navigate complex legal or technical tasks. That kind of reliability could make Grok more than just another chatbot -- it could become a trusted assistant. But the risks are real. Relying on a smaller pool of experts could limit the diversity of data the model sees. AI systems thrive on variety, and narrowing that input too much could introduce blind spots. Striking the right balance will be one of xAI's biggest challenges moving forward. For xAI, the stakes are high. Grok is Musk's answer to rival chatbots like ChatGPT and Claude. To win users, it must stand out -- not just with personality, but with capability. By infusing the model with knowledge from specialists, xAI is trying to position Grok as a more trustworthy and capable assistant. If successful, this approach could redefine how AI systems are trained across the industry. Other companies may follow, shifting away from endless generalist labeling toward smaller, more expert-driven teams. But if the strategy fails, Grok could risk falling behind competitors that continue to scale with massive datasets and broader user feedback. Why did xAI lay off hundreds of workers? To shift focus from generalist data annotators to specialist tutors with expertise in key fields. What is xAI's new strategy for Grok? Building the chatbot with expert-driven training to improve accuracy and reliability.

Elon Musk's xAI Reportedly Lays Off 500 Workers From Data Annotation Team As Startup Pivots To Specialist AI Tutors For Grok Expansion

Enter your email to get Benzinga's ultimate morning update: The PreMarket Activity Newsletter Elon Musk's artificial intelligence company xAI has reportedly laid off at least 500 workers from its data annotation team as it shifts focus toward specialist roles aimed at accelerating the development of its Grok chatbot. Mass Layoffs Hit Largest xAI Team According to internal emails reviewed by Business Insider, the company told employees on Friday night that it was downsizing its group of generalist AI tutors, who had been responsible for labeling and categorizing data to train Grok. "After a thorough review of our Human Data efforts, we've decided to accelerate the expansion and prioritization of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately," the message read. "As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude." Workers were informed they would be paid through the end of their contracts or until Nov. 30, but access to company systems was cut off immediately. See Also: Tesla Robotaxi Downloads Outpace Uber By 40% On Apple's App Store Amid Ease Of Self-Driving Regulations Pivot Toward Specialist Tutors The layoffs came as xAI announced plans to grow its specialist tutor team by "10X." "We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI," the company stated on X, formerly Twitter. In the days leading up to the cuts, workers were asked to take tests in areas ranging from coding and finance to social media behaviors, with the results meant to determine their roles. Some employees expressed frustration over the abrupt process, with one annotator calling the timing "pretty shady" before having their Slack account deactivated, said the report, citing screenshots. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Leadership And Reorganization The reorganization was overseen by Diego Pasini, a University of Pennsylvania student on leave who joined xAI in January and recently became the team's leader, according to his LinkedIn profile. Big Funding, Bigger Ambitions The shakeup follows xAI's $10 billion in new financing disclosed in June, including a $5 billion debt raise and a $5 billion equity investment led by Morgan Stanley. The funding is aimed at expanding Musk's AI infrastructure through data centers as competition in the industry intensifies. Earlier this year, xAI acquired Musk's social media platform X, valuing the startup at $80 billion. The company projects more than $13 billion in annual earnings by 2029. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Elon Musk's xAI Hires Trump Aide Stephen Miller's Wife Katie Amid Controversial Memphis Data Center Permit Win Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image via Shutterstock Market News and Data brought to you by Benzinga APIs

Musk's xAI lays off hundreds of data annotators, Business Insider reports - The Economic Times

The company sent out emails Friday night notifying employees that it was planning to downsize its team of generalist AI tutors, the report said citing multiple messages viewed by Business Insider.Elon Musk's xAI laid off at least 500 workers from its data annotation team, Business Insider reported on Friday. The company sent out emails Friday night notifying employees that it was planning to downsize its team of generalist AI tutors, the report said citing multiple messages viewed by Business Insider. Reuters could not immediately verify the report.

Musk's xAI Lays Off 500, Focuses on Specialist Grok Chatbot AI Roles

Elon Musk's xAI has laid off nearly 500 employees from the data annotation team as a part of a major shift in the company's AI development strategy. The layoff primarily affected generalist AI tutors, who had been instrumental in training xAI's generative AI chatbot, Grok. The generalist AI tutors annotated, categorized, and contextualized massive amounts of information so that Grok would be better positioned to grasp human language with its endless variations. Their work helped Grok respond and perform better overall. In an internal email to employees, it was clarified that to "accelerate the growth and focus on our specialist AI tutors, while decreasing our focus on general AI tutor roles." The company stated that the majority of generalist AI tutor roles were no longer needed, resulting in on-the-spot terminations. Impacted staff members will continue to receive their paychecks until the end of their contracts till November 30, 2025. However, certain high-ranking members of the human data management team had their system permissions withdrawn even before the official statement. This move highlights the suddenness of the restructuring. These layoffs account for a third of xAI's data annotation division, which initially had a workforce of roughly 1,500 workers. Industry experts suggest that this decision highlights xAI's broader approach to focusing on a narrow set of domain-specific AI capabilities rather than maintaining a large, generalist workforce.

Musk's xAI lays off hundreds of data annotators, Business Insider reports

(Reuters) - Elon Musk's xAI has laid off at least 500 workers from its data annotation team, which helps develop the company's Grok chatbot, Business Insider reported on Friday. The company notified employees by email on Friday night that it was planning to downsize its team of generalist AI tutors, the report said, citing multiple messages viewed by Business Insider. Responding to a request for comment, xAI referred to a post on X in which the company said it was hiring for roles across domains and planned to increase its specialist AI tutor team by "10X." The data annotation team, xAI's largest, teaches Grok to understand the world by contextualizing and categorizing raw data, Business Insider said. Workers were told that they would be paid through either the end of their contract or November 30 but their access to company systems would be terminated on the day of the layoff notice, the report said. xAI finance chief Mike Liberatore left the company around the end of July after just a few months on the job, the Wall Street Journal reported this month, citing people familiar with the matter. Musk launched xAI in 2023 to challenge Big Tech's AI push, accusing industry leaders of excessive censorship and lax safety standards. (Reporting by Preetika Parashuraman in Bengaluru; Editing by Himani Sarkar and William Mallard)