Elon Musk’s artificial intelligence startup xAI has laid off approximately 500 workers from its data annotation team, marking a significant reduction in its largest employee group. The move, which affects about a third of the team responsible for training the company’s Grok chatbot, was announced via email on Friday night, according to reports from Business Insider.
The layoffs stem from a strategic pivot within xAI’s human data efforts. In the notification email viewed by Business Insider, the company stated: “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.” As a result, most generalist AI tutor positions were eliminated, with affected employees’ access to company systems terminated immediately, though they will receive pay through the end of their contracts or November 30, whichever comes first.
The data annotation team plays a crucial role in xAI’s operations, helping to develop and refine Grok by contextualizing and categorizing raw data to teach the AI model how to understand the world. Prior to the layoffs, the team’s main Slack channel had over 1,500 members; by Friday evening, that number had dropped to just over 1,000, and continued to decline.
This reorganization follows recent internal changes at xAI, including the deactivation of Slack accounts for several senior-level employees, such as the former head of the data annotation team, as reported earlier this week. In the lead-up to the layoffs, workers underwent one-on-one reviews of their responsibilities, projects, and achievements. Nine affected employees told Business Insider they were asked to highlight standout coworkers during these sessions.
On Thursday night, xAI instructed team members to prepare for a broader reorganization, including a series of tests designed to assess strengths and determine future roles. Posted by Diego Pasini, who recently assumed leadership of the team, the announcement urged workers to complete at least one test by Friday morning. The assessments covered domains such as STEM, coding, finance, and medicine, alongside more specialized areas like Grok’s “personality and model behavior,” “shitposters and doomscrollers,” and safety improvements through “red teaming” the bot.
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
In response to inquiries, an xAI spokesperson directed attention to a company post on X announcing plans to “surge our Specialist AI tutor team by 10x” and linked to open roles on its careers page, signaling a focus on expanding specialized expertise.
xAI, founded by Elon Musk in 2023, has been aggressively hiring to compete in the AI race, particularly for roles supporting Grok’s development. This layoff represents a recalibration amid rapid growth, prioritizing efficiency in AI training processes.
