Elon Musk’s AI startup xAI has reportedly laid off 500 team members from data annotation team on Friday night. This report was seen by Business Insider through internal email sent to team members.
The emails allegedly reveal an abrupt “strategic pivot,” with the company choosing to fast-track the growth and expansion, plus emphasis on specialized AI tutors for prioritization.
In addition to that, the company cited that "scaling back our focus on general AI tutor roles" is also part of the plans. “In light of this new direction, the majority of general AI tutor roles are no longer required, and your employment with xAI will be coming to an end,” the company is said to have stated via the email sent to the team members.
Affected employees were also told that they would be paid through either the end of their contract or November 30. One affected employee—who asked not to be named—said their access to the company's internal systems (including Slack and other internal tools) was terminated immediately upon notice.
However, when xAI was contacted for more information regarding the matter, the company's representative directed us to to a statement on X that states that the company is planning to grow their Specialist AI tutor team to 10x its current size.
Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x!
— xAI (@xai) September 13, 2025
We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI!https://t.co/htpc2RijLG
The data annotation team was xAI’s largest team. The team has up to 1500 members that works to label and prepare data used to train xAI’s chatbot Grok. However, the downsizing represent about one-third (⅓) of the team members.
In addition to what the data annotation team members do, they categorized and contextualized raw data that helps Grok “understand the world.” Some of the tasks included annotating video, audio, evaluating behavior, and safety testing.
xAI is Building Specialist AI Tutors
For xAI to have reverted us back their post on X, formerly Twitter, show that the company is now focusing on building up specialist AI tutors to expand that team roughly to ten-fold, according to the post we were referred to.
These specialists are hired "across domains like STEM, finance, medicine, safety, and many more," the company said in the X post.
The generalist roles are being scaled back. It means that instead of keeping a large workforce of “generalist” AI tutors—people who work across many subjects at a basic level—they’re cutting back those roles and pivoting resources toward “specialist” tutors, who focus on narrower and higher-expertise areas.
Meanwhile, it's important to note that before the layoffs, staffs were asked to take tests—some technical like coding, some behavioral and content style like handling “Grok’s personality and model behavior”—to see how they might fit into the new specialist roles.
In addition to that, one‐on‐one meetings with employees were done to review what they’ve done, their contributions, perhaps to determine who can move into specialist roles. As a result of these pivoting, several senior staff members had Slack access deactivated, and 500 team members were laid off.
The Slack deactivation suggests access removals. The Slack channel for annotators dropped from 1,500 members to a little over 1,000 during the layoffs. Despite all these, xAI posted that they are hiring across domains and they want to scale the specialist tutor team by “10×”.
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