Employees leave the xAI office following layoffs that cut about one-third of the company’s data annotation team—around 500 workers—as xAI shifts focus toward specialist AI tutors. Image Source: ChatGPT-5
Elon Musk’s xAI Cuts 500 Data Annotation Jobs in Major Layoffs
Key Takeaways: xAI’s Data Annotation Layoffs
xAI laid off about one-third of its data annotation team—around 500 workers.
Employees lost system access immediately but will be paid through November 30 or the end of their contracts.
The layoffs reduced the main Slack channel from 1,500 members to about 1,000 in a single day.
xAI says it will expand its specialist AI tutor team by 10x, with new jobs posted online.
Staff were required to take domain-specific skill tests in STEM, coding, medicine, finance, and safety just before the cuts.
Layoffs: One-Third of xAI’s Largest Team
On Friday night, xAI emailed staff that hundreds of jobs were being cut immediately. The workers belonged to the company’s data annotation team—its largest workforce group—responsible for teaching Grok to interpret and categorize raw information.
Workers were told their employment would end that day, with system access revoked immediately. However, they would be paid through November 30 or until their contracts expired.
According to Business Insider, the team’s Slack channel dropped from 1,500 members Friday afternoon to just over 1,000 by evening, with the number continuing to decline.
By the Numbers: xAI Layoffs and Reorganization
500 workers — laid off, equal to about one-third of xAI’s data annotation team.
1,500 to 1,000 — drop in members of the team’s main Slack channel in a single day.
November 30 — date through which most laid-off workers will continue to receive pay.
10x expansion — planned growth of the specialist AI tutor team, according to xAI.
Company Statement and Specialist Pivot
In the layoff notice, xAI told employees:
“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 part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude."
After publication, xAI pointed to a post on X promising to “surge our Specialist AI tutor team by 10x” and shared links to open roles on its careers page.
Signs of Turmoil Before the Layoffs
The notices came just days after several senior-level employees, including the team’s former head, had their Slack accounts deactivated, according to Business Insider.
In the days that followed, workers were called into one-on-one meetings to review their responsibilities, projects, and achievements, nine employees told the outlet. They were also asked if there were coworkers they wanted to recognize for their contributions.
Reorganization and Skill Testing
On Thursday night, less than 24 hours before the layoffs, workers were told to prepare for a reorganization. Annotators were instructed to complete a series of skill tests by Friday morning West Coast time to decide their future positions within the company. Screenshots reviewed by Business Insider show the tests were meant to categorize annotators and supervisors by their skills and areas of interest.
The tests, organized by newly appointed team leader Diego Pasini, covered fields such as STEM, coding, finance, and medicine, alongside unusual categories like Grok’s “personality and model behavior” and “shitposters and doomscrollers.” Other tests focused on safety, including red teaming, and annotation of audio and video content.
Two workers said the STEM and coding tests were conducted on CodeSignal, while others were hosted on Google Forms. Screenshots show that more than 200 workers responded with a check-mark emoji, while over 100 replied with questions or concerns.
Some workers expressed frustration with the short notice: “Doing this after people have gone home for the day is pretty shady,” one wrote.
That worker’s Slack account was reportedly deactivated soon after.
Leadership and Oversight
The directive for reorganization came from Diego Pasini, who recently assumed leadership of the data annotation team. According to his LinkedIn profile, Pasini joined xAI in January 2025 and is currently “on leave” from undergraduate studies at the Wharton School of Business, University of Pennsylvania.
Neither Pasini nor an xAI spokesperson responded to requests for comment.
Q&A: Understanding the xAI Layoffs
Q: How many workers did xAI lay off?
A: About one-third of its data annotation team—around 500 employees.
Q: Why did xAI make the cuts?
A: The company is shifting focus to specialist AI tutors, which it says will improve the training of Grok.
Q: When did the layoffs happen?
A: Notices went out on Friday evening, with access terminated immediately.
Q: What are specialist AI tutors?
A: They are annotators with domain expertise in areas like STEM, coding, medicine, finance, and safety testing.
Q: Who is leading the data annotation team now?
A: Diego Pasini, who joined xAI in January 2025 and is currently on leave from the Wharton School of Business.
What This Means: Grok’s Development and Industry Trends
The layoffs represent a major shift in how xAI is training Grok. By reducing its generalist workforce and investing in domain experts, the company is betting on specialist-driven annotation to strengthen Grok’s capabilities in fields like coding, medicine, and finance.
But the abrupt rollout—overnight testing demands followed by immediate layoffs—also highlights the precarious role of AI data annotation, a field that is critical to chatbot development but often unstable for workers.
If successful, the pivot could help Grok differentiate itself in an increasingly competitive AI chatbot market. At the same time, it underscores a broader reality: as AI companies race to refine their models, the human tutors behind them continue to face sharp uncertainty.
Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiro’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.