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.
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 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.